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ALLEGATIONS OF DISCRIMINATION 

AND RETALIATION AND THE CFPB 

MANAGEMENT CULTURE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT 

AND INVESTIGATIONS 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JULY 30, 2014 

Printed for the use of the Committee on Financial Services 

Serial No. 113–96 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

GARY G. MILLER, California, Vice Chairman 

SPENCER BACHUS, Alabama, Chairman 

Emeritus 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

TOM COTTON, Arkansas 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

STEVEN HORSFORD, Nevada 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

PATRICK T. MCHENRY, North Carolina, Chairman 

MICHAEL G. FITZPATRICK, Pennsylvania, 

Vice Chairman 

SPENCER BACHUS, Alabama 

PETER T. KING, New York 

MICHELE BACHMANN, Minnesota 

SEAN P. DUFFY, Wisconsin 

STEPHEN LEE FINCHER, Tennessee 

RANDY HULTGREN, Illinois 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

AL GREEN, Texas, Ranking Member 

EMANUEL CLEAVER, Missouri 

KEITH ELLISON, Minnesota 

CAROLYN B. MALONEY, New York 

JOHN K. DELANEY, Maryland 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

DANIEL T. KILDEE, Michigan 

STEVEN HORSFORD, Nevada 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

July 30, 2014 ..................................................................................................... 1 

Appendix: 

July 30, 2014 ..................................................................................................... 43 

WITNESSES 

WEDNESDAY, JULY 30, 2014 

Cordray, Hon. Richard, Director, Consumer Financial Protection Bureau ........ 5 

APPENDIX 

Prepared statements: 

Cordray, Hon. Richard ..................................................................................... 44 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Duffy, Hon. Sean: 

Letter to Hon. Gene Dodaro, Comptroller General of the United States, 

U.S. Government Accountability Office (GAO), from Financial Services 

Committee Chairman Jeb Hensarling, Financial Institutions and Consumer Credit Subcommittee Chairwoman Shelley Moore Capito, and 

Oversight and Investigations Subcommittee Chairman Patrick T. 

McHenry, dated July 18, 2014 ..................................................................... 46 

Response letter from GAO to Financial Services Committee Chairman 

Jeb Hensarling, dated July 30, 2014 ........................................................... 48 

Green, Hon. Al: 

Letter to Financial Services Committee Chairman Jeb Hensarling, and 

Oversight and Investigations Subcommittee Chairman Patrick T. 

McHenry, from Financial Services Committee Ranking Member Maxine 

Waters, and Oversight and Investigations Subcommittee Ranking 

Member Al Green, dated July 22, 2014 ...................................................... 49 

(1) 

ALLEGATIONS OF DISCRIMINATION 

AND RETALIATION AND THE CFPB 

MANAGEMENT CULTURE 

Wednesday, July 30, 2014 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 3:30 p.m., in room 

2128, Rayburn House Office Building, Hon. Patrick T. McHenry 

[chairman of the subcommittee] presiding. 

Members present: Representatives McHenry, Fitzpatrick, Duffy, 

Fincher, Hultgren, Wagner, Barr, Rothfus; Green, Ellison, Maloney, Beatty, Heck, Kildee, and Horsford. 

Ex officio present: Representatives Hensarling and Waters. 

Chairman MCHENRY. The subcommittee will come to order. 

The title of today’s Oversight and Investigations Subcommittee 

hearing is, ‘‘Allegations of Discrimination and Retaliation and the 

CFPB Management Culture.’’ 

Without objection, the Chair is authorized to declare a recess of 

the subcommittee at any time. 

The Chair now recognizes himself for 5 minutes for an opening 

statement. 

This afternoon, our subcommittee meets to continue our investigation into allegations of discrimination and retaliation at the 

Consumer Financial Protection Bureau (CFPB). 

Director Cordray, we appreciate your willingness to appear before us today. 

In April of this year, 7 months after a Deloitte Consulting report 

confirmed racial disparities in the Bureau’s hiring, pay, and performance review ratings, and 4 months after the Defense Investigators Group confirmed Angela Martin’s claims of Bureau retaliation, 

Director Cordray wrote to me to request that he appear before the 

subcommittee to discuss these troubling issues and his responsibility for controlling CFPB managers. 

Accountability is crucial to leadership, and I look forward to Director Cordray specifying actions that he has taken to reprimand 

and terminate managers who have wrongfully treated and retaliated against CFPB employees. 

Equally important, I look forward to hearing from Mr. Cordray 

about how he has taken actual steps to end employee abuse at the 

2 

CFPB. People are suffering and feeling unprotected at their place 

of work, and we have heard from them. 

Their managers have been given unequivocal free rein, resulting 

in a toxic management culture that lacks accountability and trust. 

Employees fear speaking out and they fear asserting their rights 

lest they suffer reprisals and retaliations. This must change. I 

think we all agree about that. 

Mr. Cordray testifies before us here today fully furnished with 

the capacity and obligation to have already taken immediate action 

against oppressive managers and to assert his internal accountability and leadership at the Bureau. Anything less than that is an 

abdication of the Director’s responsibility to the Bureau and its employees. 

Like Director Cordray, I have heard firsthand about the unsafe 

culture within the Bureau. In fact, since the subcommittee opened 

its investigation into allegations of discrimination and retaliation 

at the Bureau, no fewer than 32 employees have come forward 

about their maltreatment. 

These 32 brave leaders have come forward to do what is right to 

protect their colleagues who suffer, and they have stood up even in 

the face of retribution from their managers if they were found out. 

And what do you think these employees are telling us, Mr. 

Cordray? They are telling us that other people are being harmed, 

and they are being harmed. It is not disparate impact. It is about 

individual cases of discrimination and retaliation. 

It is evident that the Bureau’s problems run deeper than a manager’s treatment of any one employee such as Angela Martin, Ali 

Naraghi, or Kevin Williams. The problems are much larger than 

some modifications to the performance management system. The 

problem is a CFPB management culture that condones intimidation, discrimination, and retaliation. 

And if the Director has failed to reprimand and remove bad managers, then the problem is also his leadership or lack thereof. That 

is why we are having this hearing today, to give the Director the 

opportunity to say what he has done and how he has fulfilled his 

obligations. 

Director Cordray, dozens of your employees are coming forward 

to this subcommittee because they have nowhere else to turn. At 

least, that is how they feel. They don’t trust their EEO process. 

They don’t get a fair shake in your union grievance process. And 

some of them have even approached you personally, apparently, 

with nothing to show for it. 

For the CFPB employees watching, I would like to say this: We 

are listening. If you have already come forward to share your concerns, know that you are not alone. If you are unsure about whether coming forward will do any good, please know that it will. 

To that end, I, along with Financial Services Committee Chairman Hensarling and Financial Institutions and Consumer Credit 

Subcommittee Chair Capito, recently wrote to the U.S. Government 

Accountability Office (GAO) to request that it undertake an independent, nonpartisan investigation into these matters. I am 

pleased to report that the GAO has accepted our request, and 

shortly, Bureau employees will have an opportunity to confidenVerDate Nov 24 2008 15:34 Dec 19, 2014 Jkt 091160 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\91160.TXT TERRI
3 

tially share all of their concerns with the Government Accountability Office. 

Director Cordray, the subcommittee recognizes that its investigations led you to initiate some action. However, changing employee 

ratings, topping off pay, hiring consultants, and holding listening 

sessions around the office does nothing to hold your managers accountable. And so, these measures are wholly inadequate. 

I am not interested in hearing about the bureaucratic ways the 

Bureau is papering over the real problem. We need action. We need 

results. Like you wrote to me in April, Director Cordray, you said, 

in essence, that you are ultimately responsible for the Bureau’s 

management, and that is why you have agreed to come forward 

and to give us your response. 

So today, I am interested in hearing about the actual steps you, 

personally, have taken to protect your employees and end the Bureau’s management culture of intimidation and retaliation. 

I will now yield to the distinguished ranking member of the subcommittee, Mr. Green of Texas, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

And I thank you for appearing today, Mr. Cordray. You and I 

know that you have been amenable to and willing to appear at all 

times that you have indicated such. So it does not surprise me that 

you are here today. 

This is the fourth hearing entitled, ‘‘Allegations of Discrimination 

and Retaliation and the CFPB Management Culture,’’ the fourth 

hearing. We have heard allegations, and I want to assure all that, 

while we have heard allegations, I have not drawn a final conclusion, just because we have heard allegations. 

I will let you know that we have spent approximately 8 hours 

and 40 minutes of investigative time hearing allegations, looking at 

subpoenas. And I believe that these hearings initially caused me to 

have a visceral thought of this, is about the CFPB only, that the 

CFPB was being singled out. 

That was my initial thought, and there probably may be some of 

this, but I have also come to conclude that it is bigger than the 

CFPB. It is about invidious discrimination wherever it happens to 

be, not just at the CFPB. 

And to this end, the ranking member of the full Financial Services Committee and I have sent a letter to the chairman of the full 

Financial Services Committee and the chairwoman of the Financial 

Institutions and Consumer Credit Subcommittee asking that invidious discrimination be investigated in other areas. For example, we 

have asked in this letter that allegations against Goldman Sachs 

be investigated. 

I ask that this letter be presented for the record, please, if there 

are no objections. 

Mr. DUFFY [presiding]. Without objection, it is so ordered. 

Mr. GREEN. And I just believe that what is good for the regulator 

is good for the regulated. If we are going to investigate with a great 

amount of energy, and many, many hours, the CFPB, the regulator, I think we have to look at the regulated as well. These are 

all allegations, but here are some of the allegations. 

As you know, we started this investigation with an American 

Banker article. Bloomberg has an article entitled, ‘‘Goldman ‘Boys 

4 

Club’ Accused of Mocking Women as ‘Bimbos’ and ‘Party Girls.’’’ 

What is good for the regulator is good for the regulated. Bloomberg 

indicates that there are concerns with salaries and promotions at 

Goldman. 

But there is another article that goes into some greater detail in 

terms of what the issues are. This one is from the International 

Business Times. It indicates that the most damning claims revealed in documents—all allegations—are: one, that a woman was 

punished for reporting an alleged sexual assault by a male co-worker; and two, Goldman hired beautiful women, but mocked their intelligence. 

I am reading from the International Times. These are allegations. I don’t draw conclusions until I hear from all sides. 

Goldman paid women less because they didn’t consider them 

heads of household. Escorts were hired for a holiday party. Women 

were worried that becoming pregnant would threaten their chances 

at a promotion. Male Goldman Sachs employees took clients to 

strip clubs. Women weren’t taken seriously when socializing at 

bars and clubs after workhours, all allegations. 

But I do believe that is what good for the regulator is good for 

the regulated, and my hope is that my colleagues will join me—we 

have made the request—and let’s look into what is happening at 

Goldman Sachs. Let’s not end this investigation with the regulator. 

Let’s look at what is happening with the regulated. 

My belief is that people of goodwill who have decided that this 

is a course that we should embark upon will not cease and desist 

with the regulator. My belief is that they will look into what is 

happening with the regulated. 

Dr. King reminded us, Mr. Chairman, that the truest measure of 

the person is not where you stand in times of comfort and convenience, but where you stand in times of challenge and controversy. 

This is a time of challenge and controversy. We are investigating 

allegations of discrimination. 

And while Mr. Cordray has not been a perfect public servant, he 

has been a good public servant, and I look forward to hearing what 

he has done to take corrective action at the CFPB. And I also look 

forward to looking into the regulated to the same extent that we 

are looking into the regulators. 

Mr. DUFFY. Thank you, Mr. Green. 

We now welcome our witness, CFPB Director Richard Cordray. 

Director Cordray was confirmed by the Senate on July 16, 2013, to 

serve as the CFPB’s first Director. 

Prior to his service at the CFPB, Director Cordray served the 

people of the State of Ohio as Attorney General, State Treasurer, 

State Representative, and Ohio’s first Solicitor General. 

Director Cordray is a graduate of Michigan State University, Oxford University, and the University of Chicago Law School. 

The witness will be recognized for 5 minutes to give an oral presentation of his testimony. 

On your table, Director Cordray—you are well aware of this—we 

have three lights: green means go; yellow means hurry up; and red 

means stop. You are well aware of that. 

5 

After you are done with your presentation, each member of the 

subcommittee will be given 5 minutes in which to ask you questions. 

Without objection, the witness’ written statement will be made a 

part of the record. 

As you are well aware, too, our microphones are awfully sensitive. So if you would make sure it is on and pull it close, that will 

help everyone on the committee to hear your testimony. 

And, with that, Director Cordray, you are now recognized for 5 

minutes. 

STATEMENT OF THE HONORABLE RICHARD CORDRAY, 

DIRECTOR, CONSUMER FINANCIAL PROTECTION BUREAU 

Mr. CORDRAY. Thank you, Chairman McHenry, I guess Acting 

Chairman Duffy, Ranking Member Green, and members of the subcommittee. I am glad to be here today to address certain personnel 

and management matters at the Consumer Financial Protection 

Bureau. 

Although I am the Director of the Bureau and I am the one who 

is squarely responsible to you for its oversight, the many significant accomplishments of this new agency have been achieved not 

by me but by my dedicated and talented colleagues. In just 3 years, 

they formed a strong team that is busy improving everyday life for 

consumers all over this country, in each of your congressional districts. They have taken enforcement actions that put more than 

$4.6 billion back in the pockets of millions of American consumers. 

They have adopted new mortgage rules, as required by Congress, 

to make the world’s largest single consumer financial market safer 

for consumers and for our economy. I am proud of our Consumer 

Response team, which, so far, has handled over 400,000 complaints, secured both monetary and non-monetary relief on behalf 

of many consumers, and constructed a public database of complaints that is generating more careful focus on customer service 

at our larger banks and financial companies. 

At the same time, the strong CFPB team has been doing all the 

work necessary to build a brand new Federal agency from the 

ground up. That work has not been easy, and some of the working 

conditions have been especially difficult for people. We have been 

consistently short-staffed, and working space has been challenging. 

Management structure had to be developed from scratch, and for 

a long time employees have not had settled expectations around 

key matters like performance reviews, pay adjustments, and promotions, which created some anxiety. Looking back, I can also see 

that we felt tremendous pressure. We were created in the wake of 

the largest financial crisis since the Great Depression, and there 

were high expectations amongst the public and aggressive goals set 

for us by Congress. From the beginning, I believed that it was extremely important for us to get things done, to show clear progress, 

and to deliver on our promise to make things better for American 

consumers. All of that increased the workload and made it harder 

for everyone to cope with the demands of the new situation. 

I take very seriously the concerns aired at your previous hearings about the Bureau’s work environment. I am committed to ensuring that all Bureau employees are treated fairly and that they 

6 

receive the respect and dignity they deserve. Across-the-board, they 

are highly dedicated to public service and to the mission of this 

agency. In turn, I want them to be in position to do their best work 

and be able to see that they are making a difference to the future 

of this country. 

Because of the speed with which we tried to build this new agency, we found that we did not get everything right for our own employees. One especially sore spot was the system for reviewing and 

assessing the performance of CFPB employees. During the second 

year we had that system, we heard complaints and concerns from 

employees about it. After we had completed the second year of performance reviews, we began to analyze the numbers in more detail 

and we found that many different categories of employees were 

seeming to be treated unevenly. Whether the distinction was headquarters versus field, or one part of the Bureau versus another, or 

bargaining unit versus non-bargaining unit employees, or other 

categories like age and race, we perceived that the review system 

was creating differential outcomes that indicated the system was 

unsatisfactory and not working out as intended. Notably, about 

half of our employee grievances filed to date have concerned performance reviews. 

Having recognized these issues, we took decisive and comprehensive actions to address them. We self-initiated a more detailed 

analysis that ultimately showed ratings disparities across a wide 

range of employee characteristics, which you have seen in the form 

of the Snapshot report we released earlier this year. We also put 

on the table in our union negotiations whether to discard this system, which we agreed to do after bargaining over it. For the next 

2 fiscal years, we will be moving to a new two-level performance 

review system, and we have agreed to a joint working group with 

our union to design a new system to use after that. We also announced that we would adjust prior performance-related compensation for the 2 years during which our employees may have been adversely affected by the flaws in the prior system. By self-correcting 

and self-remediating disparities in our performance ratings, we are 

holding ourselves to the same standards of fairness that we expect 

from the financial industries we oversee. 

Although the Bureau has had good diversity numbers around 

hiring and contracting, we need to focus more consciously on how 

to improve our culture, so that diversity and inclusion are more 

deeply ingrained in our everyday work life. To that end, I have elevated our Office of Minority and Women Inclusion (OMWI) to work 

directly out of my office and I have tasked the head of OMWI, Stuart Ishimaru, with conducting dozens of Bureau-wide listening sessions to hear directly from our employees about their experience 

with equality and fairness. Hundreds of our colleagues have participated in these sessions, and we are listening closely to learn 

more about how to set a better direction for the future and achieve 

some of the goals that I have touched on here today. 

I am here today because I know you have been seeking to ensure 

congressional oversight of this agency and these issues. As the sole 

Director of the Bureau, I am the responsible party to work with 

you in providing such oversight. Other issues have arisen involving 

individual allegations that are part of employee grievances and 

7 

complaints. Like other Federal agencies, the Bureau has an Equal 

Employment Opportunity complaint process and a grievance process for employees to initiate and seek resolution of any allegations 

of discrimination and harassment. It is important that these processes be able to work, that individual privacy and due process 

rights protected by Federal law can be respected, and that both 

sides of every story can be heard and considered and assessed accordingly. Public discussion of these individual matters may have 

a chilling effect that prejudices individual rights and undermines 

the integrity of the legal process. For this reason, I must be very 

careful in speaking about ongoing personnel matters in this public 

hearing. We take each of these allegations very seriously, and we 

will continue to work diligently to resolve any issues through all 

appropriate channels. 

Thank you for the opportunity to make this statement, and I 

would be happy to answer your questions. 

[The prepared statement of Mr. Cordray can be found on page 44 

of the appendix.] 

Mr. DUFFY. Thank you, Mr. Cordray. 

The Chair now recognizes the gentleman from Pennsylvania, Mr. 

Fitzpatrick, for 5 minutes for questions. 

Mr. FITZPATRICK. I thank the chairman for calling the hearing. 

And, Director Cordray, we appreciate you being here and your 

assessment that the agency is essentially a work in progress and 

that, in many instances, the management or the implementation of 

the policies has not been correct or done correctly. 

We also hope that you appreciate and respect the obligation of 

this Oversight and Investigations Subcommittee to do some oversight on the agency. 

Mr. CORDRAY. I do. 

Mr. FITZPATRICK. Are you aware that on March 31, 2014, which 

was 2 days before the whistleblower, Angela Martin, was said to 

testify here, Scott Pluta called an all-hands-on-deck meeting of the 

Office of Consumer Response? 

Mr. CORDRAY. I am not specifically aware of all the meetings that 

go on at the Bureau, including that one. 

Mr. FITZPATRICK. You didn’t call the meeting? 

Mr. CORDRAY. I did not. 

Mr. FITZPATRICK. You were not aware of the meeting? You were 

not aware of that meeting on— 

Mr. CORDRAY. I don’t believe I was. No. 

Mr. FITZPATRICK. —March 31st? 

So you wouldn’t be aware that the Bureau’s Chief Operating Officer, also, Mr. Sartaj Alag, I think—is that his name?—was also in 

attendance at this meeting and addressed the employees? 

Mr. CORDRAY. I was not at the meeting. I don’t know the details 

of that meeting. 

Mr. FITZPATRICK. Did anybody speak to you about the meeting 

after it occurred? 

Mr. CORDRAY. I don’t know if they might have at the time. There 

are meetings across the Bureau all the time, and I don’t know the 

details of all of them. 

8 

Mr. FITZPATRICK. I can tell you this, Mr. Director. At the meeting, which I would describe as a pep rally, Scott Pluta twice described this committee’s oversight efforts as ‘‘political theater.’’ 

Do you agree with Mr. Pluta’s characterization of our efforts, as 

an Oversight and Investigations Subcommittee? 

Mr. CORDRAY. I would hope that would not be the nature of congressional oversight. 

Mr. FITZPATRICK. Would you agree with Mr. Pluta’s assessment 

of our efforts? 

Mr. CORDRAY. I would hope that would not be the nature of congressional oversight. 

Mr. FITZPATRICK. Certainly, the presence of the COO lends the 

imprimatur of the agency senior management at this meeting. 

So if that occurred, what message do you think it sends to the 

employees? 

Mr. CORDRAY. I take seriously congressional oversight. I have 

been offering myself to testify in front of this subcommittee. I 

thought that there were others who were called to testify where, 

perhaps, the responsibility should have been on me. 

I think it is appropriately on me. And I think you know that I 

have always respected and tried to be responsive to Congress’ oversight and understand the importance of that for an independent 

Federal agency like ourselves. 

Mr. FITZPATRICK. Do you believe that Mr. Pluta’s view of congressional oversight is widely shared by the managers at your agency? 

Mr. CORDRAY. I can’t speak for people, but I would hope that the 

nature of congressional oversight would not be as you described. 

Mr. FITZPATRICK. Mr. Director, at this meeting, Scott Pluta also 

said, ‘‘My guess is the individuals who constructed Wednesday’s 

event would prefer to keep certain things in play such that dissenting voices aren’t there.’’ And, for the record, we invited two 

CFPB managers, Liza Strong and Stacey Bach, to attend. They did 

not attend. 

Did you suggest that they not attend or prevent their attendance 

here at this subcommittee? 

Mr. CORDRAY. Here is what I recall about the sequence of events. 

There was a subcommittee hearing noticed with the purpose of the 

subcommittee meeting to be to review the performance review system that I believe, as I testified, was flawed and we were in the 

process of scrapping the system and fixing the problems. 

Two days before the hearing, as I recall it, there was a suggestion suddenly that two witnesses would be called to testify about 

individual personnel matters. We were concerned about that, tried 

to explore with this subcommittee what was happening in terms of 

a notice of a meeting being changed so dramatically a few days before, concerned about privacy and due process rights of individuals. 

And, ultimately, as I understand it, both Ms. Strong and Ms. 

Bach have either testified to this committee or been deposed in a 

structured and transcribed interview. 

Mr. FITZPATRICK. But you are aware that they needed to be subpoenaed in order to come to this committee. Correct? 

Mr. CORDRAY. I believe their lawyers requested that they be subpoenaed so that they would have protection from this committee. 

9 

Mr. FITZPATRICK. Nobody at the agency suggested that they not 

attend? 

Mr. CORDRAY. As I said, 2 days before the hearing, suddenly injected into it were individual personnel matters and allegations 

and we were concerned about privacy rights of individuals and did 

want to explore— 

Mr. FITZPATRICK. So was it suggested that they not attend? 

Mr. CORDRAY. —did want to explore further with the subcommittee what was the appropriate way of proceeding here. 

Mr. FITZPATRICK. Were they directed not to attend? 

Mr. CORDRAY. I think we did want to explore further with the 

subcommittee, and we had very little time— 

Mr. FITZPATRICK. It is just a yes-or-no answer. 

Were they directed not to attend? 

Mr. CORDRAY. They did ultimately attend at a different set of 

hearings and gave a transcribed interview. 

Mr. DUFFY. The gentleman’s time has expired. 

Mr. FITZPATRICK. Thank you, Director Cordray. 

Mr. DUFFY. The Chair now recognizes the ranking member of the 

full Financial Services Committee, Ms. Waters from California, for 

5 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman, and members. 

Mr. Cordray, as you know, the Democrats on this side of the aisle 

have taken seriously the complaints that have been made about the 

Consumer Financial Protection Bureau, and we have cooperated. 

We have done everything within our power to make sure we get 

to the bottom of it and to find out what we can do to ensure that 

in the Consumer Financial Protection Bureau—that they do not 

have any ongoing cases of what is alleged to be discrimination, and 

we have asked the opposite side of the aisle to cooperate with us 

by sending us certain information, which we have not gotten. 

I have listened to your testimony today and all that you are 

doing to make sure that you correct any instances of discrimination 

that you have been accused of—that the agency has been accused 

of. So I want to know more about what you are doing. 

You talked about the OMWI having been moved into your office 

to ensure that you have direct contact with them. You have mentioned listening sessions. 

Tell us again, if you will, how this is working. What is a listening 

session? What comes out of it? And what do you do with that information, for example? And why did you move the Director of your 

OMWI into your office? 

Mr. CORDRAY. So, a couple of things. 

The first is the whole performance review system. It was a major 

undertaking to decide that system was flawed and needed to be actually overhauled and ultimately scrapped, which is what we have 

done. We put it into bargaining with the union and that has been 

the result, I think agreed to with satisfaction on both sides. 

We also have—and I didn’t get into the details of this—implemented a process to remediate the employees so that they would 

not have been adversely affected during the 2 years that rating system was used. And that was a significant undertaking, but we 

10 

thought it was the right thing to do and we wanted to step up and 

address the issue out of fairness to the employees. 

In terms of the OMWI, that is, as you know—and you have given 

me counsel on this subject because you were deeply involved in the 

passage of the statute and I was not in Washington at the time— 

a major step forward in terms of dealing with these issues at the 

Federal banking regulatory agencies. I had had a dotted-line relationship with the OMWI to my office and, frankly, in the wake of 

discussions directly with you and other members of this committee, 

we have changed the reporting structure so that the OMWI reports 

directly to me, elevating the OMWI’s role. And the OMWI has now 

been undertaking the project at the Bureau to respond to and address the broader issues raised in front of this subcommittee and 

has been in direct communication with now hundreds of Bureau 

employees and is in the process of producing a report on what that 

has taught us factually about the experience the employees are 

having with equality and fairness at the Bureau and what steps 

would be appropriate to make sure that the atmosphere at the Bureau is what you would want it to be, what I want it to be, what 

the employees themselves would want it to be on these issues. 

Ms. WATERS. Mr. Cordray, we are pleased that you are here 

today, and we know that you have indicated both to my staff and 

to the chairman’s staff that you are available to come before this 

committee at any time and you are willing to do so. 

Did you find that the chairman and the subcommittee chair responded to your requests to appear before this committee and perhaps did not invite you to appear before this committee until 

today? 

Mr. CORDRAY. Not until last week. 

Ms. WATERS. But it was not—you were not before this committee 

because you were not cooperative? 

Mr. CORDRAY. No. That is correct. I offered to come. I thought 

I was the appropriate person. I am the responsible person and I am 

the one whom this Congress deals with in terms of oversight for 

this Bureau. And I thought all along that was the appropriate 

means. People had different thoughts, and people are entitled to 

their thoughts, I guess. But it wasn’t until last week that I was 

asked to come and testify in front of this committee. 

Ms. WATERS. Thank you very much. 

I yield back the balance of my time. 

Mr. DUFFY. Thank you. 

The Chair now recognizes himself for 5 minutes. 

Mr. Cordray, I would just note that I believe you asked for this 

hearing to clear up issues in regard to racism and sexism. 

I am a bit disappointed in the lack of answers you gave Mr. 

Fitzpatrick in regard to your direction to employees on April 2nd. 

Hopefully, we will have a little better luck in answers as we engage. 

Now, I know that you have indicated that it has been the system 

of review that has caused the racial and sexual bias, not the culture or the managers. So, I just want to make sure we are on the 

same page. 

11 

Before August 2nd of 2013, Angela Martin had filed an EEO 

complaint with the Bureau. You would stipulate that. Yes? The answer is ‘‘yes’’ to that. 

Mr. CORDRAY. I believe that is correct. 

Mr. DUFFY. And, to your knowledge, she was represented by 

counsel. Right? 

Mr. CORDRAY. At some point, she was represented by counsel. I 

don’t know the details of when that would have occurred. 

Mr. DUFFY. That was 7 days before the settlement. 

She had counsel leading up to the first settlement. Is that correct? 

Mr. CORDRAY. I believe that is correct. Yes. 

Mr. DUFFY. Okay. And you were asked in a prior hearing by our 

chairman, Mr. Hensarling, whether you were aware of calling Ms. 

Martin on August 7th of 2013, and your answer was, ‘‘I don’t know 

offhand whether I did.’’ 

Do you now know whether you called her on August 7th of 2013? 

Mr. CORDRAY. I do not. 

Mr. DUFFY. If I could, I am going to show you a copy of Ms. Martin’s phone record. If I could have Ryan provide that to you. Oh, 

no, it is right there. 

Mr. CORDRAY. I don’t dispute it, if that is what you are getting 

at. Maybe I can save you some time. 

Mr. DUFFY. Okay. Great. 

Mr. CORDRAY. There had been discussions back and forth between Ms. Martin— 

Mr. DUFFY. And the phone record in front of you would indicate 

that on August 7th, at 8:54 p.m., you called Ms. Martin for approximately 2 minutes. You would agree with that? 

Mr. CORDRAY. There had been discussions back and forth— 

Mr. DUFFY. Would you agree with that? 

Mr. CORDRAY. —between Ms. Martin and myself. 

Mr. DUFFY. Does your number begin with a 614? The document 

is right in front of you. Take a look. 

Mr. CORDRAY. I don’t dispute the document. 

Mr. DUFFY. Great. 

So you called her for 2 minutes and you—first of all, I want to 

note that I am not going to enter this into the record because I respect your privacy and I don’t want your personal phone record disclosed. 

Mr. CORDRAY. That’s fine. I don’t dispute the point. We can save 

some time. 

Mr. DUFFY. You are an attorney. Right? 

Mr. CORDRAY. I am an attorney. Yes. 

Mr. DUFFY. And if Ms. Martin is represented by counsel, do you 

think it is appropriate that you, as the Director, would call her directly when she is represented by counsel to discuss her case? 

Mr. CORDRAY. I read the testimony of Ms. Martin at the hearing. 

Mr. DUFFY. That is not my question. 

Do you think that is appropriate? 

Mr. CORDRAY. And she indicated that— 

Mr. DUFFY. Do you think that— 

Mr. Cordray. —it is not a represented party situation. 

12 

Mr. DUFFY. Mr. Cordray, do you think it is appropriate that you 

called her on the night of August 7th when she was represented 

by counsel? 

Mr. CORDRAY. As she testified, it was not a represented party situation. It was a continuation of a prior discussion, some of which 

she had initiated with me about resolving her dispute. 

Mr. DUFFY. So your testimony is, you do think it was appropriate? Yes? 

Mr. CORDRAY. It was not a represented party situation. I wasn’t 

acting in an attorney capacity. 

Mr. DUFFY. I don’t know what—we read your transcript. And 

considering the fact that you were an attorney general and a lawyer, you still think that was appropriate? 

Mr. CORDRAY. That was her testimony and my testimony. We 

agree. 

Mr. DUFFY. Now, I would note that 10 minutes after that call she 

sent an email out. 10 minutes. Present-sense recollection. 

The first line, ‘‘Wow, Rich Cordray just called me and said to get 

my attorneys to back down.’’ Later in the email, she says, ‘‘The fact 

that Rich would even call me is unthinkable.’’ 

And I would agree with that. It is unthinkable that you would 

call her during the pending settlement. 

Let me move on. Do you recall— 

Mr. CORDRAY. Could I address that for the record, or not? 

Mr. DUFFY. I want to move on quickly. I only have 1 minute and 

40 seconds left. 

Mr. CORDRAY. Okay. So, I can’t. 

Mr. DUFFY. Do you remember the settlement agreement with Ms. 

Martin? If I could put that up on the board— 

Mr. CORDRAY. Which one? The one with the— 

Mr. DUFFY. The first settlement agreement that was reached on 

August 7th. 

Mr. CORDRAY. Okay. 

Mr. DUFFY. The last line—I will read it to you. It is highlighted. 

‘‘Complainant—which is Ms. Martin—would manage CASA for the 

duration of the project, which is anticipated to last not less than 

30 months.’’ 

Do you agree, as per the settlement agreement with Ms. Martin, 

that she was the manager of CASA? 

Mr. CORDRAY. If that is what the settlement agreement said, 

then that is what it was. 

Mr. DUFFY. So you would say that she was the manager of 

CASA. Yes? 

Mr. CORDRAY. That was my intent. Yes. 

Mr. DUFFY. Okay. It was your intent, but was that actually what 

happened? 

Mr. CORDRAY. So what happened, as I understand it, was a very 

important matter to Ms. Martin was the reporting structure she 

would have, to whom she would report. 

Mr. DUFFY. Let me just pause you right there. I want to— 

Mr. CORDRAY. And that changed at that time because of personnel issues within the Bureau. 

Mr. DUFFY. Yes. Right after she was given the agreement— 

Mr. CORDRAY. It was a medical issue. 

13 

Mr. DUFFY. If I could put up slide 3. 

Let me just show you the CASA structure. It has the acting Enforcement Director, the CASA Director, which was not Ms. Martin, 

and then, off to the side, Project Manager, with virtually no responsibility. 

Take a look at the management structure. No one reports to Ms. 

Martin. And you would tell me that this came from the CFPB? 

Mr. CORDRAY. I am not sure what document you are referring to. 

Mr. DUFFY. It is a CFPB document— 

Mr. CORDRAY. What I do know is that Ms. Martin was dissatisfied. She reopened her grievance. We have worked through that 

and now resolved it again. 

Mr. DUFFY. Yes, you have. But I am talking about when you did 

it. 

Mr. CORDRAY. And I believe she has a productive position— 

Mr. DUFFY. Because I am going to put up the next slide, which 

will show that 2 days after she testified, remarkably, the structure 

of CASA changed. And look at what happens. 

Remarkably, the managing Director, where everyone reports, is 

to Ms. Martin, consistent with the settlement agreement. 

But it wasn’t until she came before this committee and was willing to testify before this committee that you actually complied with 

the settlement agreement. 

My time has expired. 

Mr. CORDRAY. I don’t think any of that ever quite worked out as 

intended, but we have worked out a different arrangement and settled her matter to everyone’s satisfaction, I believe. Yes. 

Mr. DUFFY. Votes have been called. But pursuant to our discussions, the Chair will now recognize Mr. Ellison from Minnesota for 

5 minutes. 

Mr. ELLISON. Thank you. Thank you very much. Sorry about 

that, Mr. Chairman. 

Mr. Cordray, my question is: Are you fully committed to making 

sure that every employee complaint is fairly investigated without 

regard to who may end up being held responsible or liable? 

Are you committed to the process to make sure all these workers 

who have brought forth complaints get them fairly and properly reviewed? 

Mr. CORDRAY. I am. And there would be no advantage to me or 

to the agency to do anything other than exactly that. 

Mr. ELLISON. And if you were to simply go to the workers who 

have made the complaints and just give them the relief that they 

are seeking without regard to the person who is accused, would 

that be fair? 

Mr. CORDRAY. My understanding is that in the Federal Government, there are processes on these things that need to be followed, 

because what you do for one employee will affect what you may do 

for other employees, and there has to be a fairness not just to the 

individual, but across-the-board. 

Mr. ELLISON. So it may be that the people who have brought 

forth these complaints will be fully vindicated and will have full redress, but there is a process that needs to take place? 

14 

Mr. CORDRAY. There are multiple processes, yes. And there are 

appeals if people are dissatisfied. And they can go outside the agency to other venues, certainly. Yes. 

Mr. ELLISON. I am sure it is frustrating for people who have legitimate complaints who, in fact, may well have been discriminated 

against. 

The fact that it takes a long time, it must be frustrating for 

them. Am I right? 

Mr. CORDRAY. I think it is frustrating for everyone. It is frustrating for me, too. I would like to see these things resolved. That 

is what I would like to see. 

Mr. ELLISON. But we are stuck with the process just because that 

is the way it is. Right? 

Mr. CORDRAY. Apparently. Yes. 

Mr. ELLISON. And I guess my question is: As the person who 

runs the shop, have you thought about making sure that the managers that you employ are getting the proper training? 

And have you thought about how to make sure that—now that 

you are up and you are running, have you tried to think about, 

‘‘Okay. Here is how we are going to be fair with all employee complaints,’’ and given training to top managers about that? 

Mr. CORDRAY. I am. And what I have come to see, frankly, is I 

don’t think we did enough of that in the beginning. We didn’t have 

many people to begin with. We didn’t have structure. We didn’t 

have programs of that sort. We now do. It is very important that 

we do. I think managers are receiving considerably more training 

than they did initially. And it was, frankly, probably an oversight 

of the Bureau and reflective of the start-up phase, perhaps, but it 

hurt us, I think, a great deal in various respects. 

Mr. ELLISON. Now, it is a fact that this whole process began— 

this committee started focusing on discrimination in the CFPB 

when the American Banker magazine, I believe— 

Mr. CORDRAY. Yes. 

Mr. ELLISON. —basically put out an article saying that, as the 

CFPB is making allegations about disparate impact of certain players in the market, they themselves have some discrimination that 

they better deal with. 

And at least the way I read the article, it sort of signaled that 

maybe what they were looking for was to make the CFPB back off 

of those claims. 

Do I have the history right? 

Mr. CORDRAY. That is not going to happen. 

Mr. ELLISON. Right. 

So the right thing to do is to make sure you clean up your house 

with regard to discrimination— 

Mr. CORDRAY. Yes. 

Mr. ELLISON. —and then pursue your mission. 

Here is my question: Of all of the people who have made complaints of discrimination and made complaints about being treated 

unfairly by certain individuals in your shop, have any of the complainants ever expressed a lack of confidence in the overall mission 

of the CFPB or have they individually said, ‘‘I am for the mission. 

I just want to make sure I am treated fairly?’’ Do you understand 

my question? 

15 

Mr. CORDRAY. I do. 

I actually heard testimony from others who came before this subcommittee previous to my appearance today, and that seemed to be 

the tenor of their views. And I think it is the broad view across the 

Bureau. 

People came to the Bureau to improve life for consumers in this 

country, and they are dedicated to that. There have been certain 

aspects of the working conditions and the situations, especially as 

a start-up agency, that made it harder for people to do that. We 

all recognize that. We have been under a fair amount of pressure 

to do that. 

But that is what everybody wants. And there is a high degree of 

adherence to the mission at the Bureau. And despite it all, the 

overall job satisfaction at the Consumer Bureau has been above 

that of the rest of the Federal Government, and I think that is notable. And it is because of the mission. 

Mr. ELLISON. I just want to say that I hope and pray that the 

people who have complaints get them fully and fairly adjudicated. 

But as I have listened to the testimony, anybody who believes that 

they are going to back the CFPB off of discrimination by making 

these allegations is dead wrong, and I am committed to making 

sure that is true. All the best to you and the complainants and the 

defendants. 

Thank you. 

Mr. CORDRAY. Thank you. 

Mr. DUFFY. I would just note that votes have been called. I would 

ask that we recess for such time as needed to cast those votes. 

I would just note, Mr. Director, you did ask for this hearing, and 

you wanted to clear the air. I would ask, after a couple of questions 

on our side, that you would rethink the forthright answers that you 

are giving. 

I would like to clear it up by way of the committee and put this 

behind us, and one of the ways to do that is to do the best you can 

to answer our questions. 

Mr. CORDRAY. My answers have been and all will be forthright, 

sir, and I will be here as long as it takes today. 

Mr. DUFFY. We have three votes. So we will reassess until such 

time the votes are concluded. 

Mr. CORDRAY. That is fine. Take your time. 

Mr. DUFFY. The committee stands in recess. 

[recess] 

Mr. DUFFY. The committee will come to order. 

The Chair will now recognize Mr. Barr from Kentucky for 5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. 

And thank you, Director Cordray, for your time today. 

As you may know, one of the employees at the Bureau who was 

hired as an examiner, Mr. Ali Naraghi, testified in front of this 

subcommittee, alleging retaliation from his managers within the 

Bureau. 

Mr. Naraghi served as a Federal Reserve Bank Analyst and Examiner and, from what I can tell, had a distinguished career of 

bank supervision prior to his employment with your agency. 

16 

In his prepared testimony, he testified that, ‘‘Voicing a professional dissenting opinion that is in any way at odds with Bureau 

management, even in the smallest ways, will result in retaliation.’’ 

And he pointed out concerns that he raised to management of the 

Bureau. Some of those concerns that he raised were that, first, the 

Bureau hired inexperienced managers whose only qualification appeared to be personal or other connections to Bureau hiring officials. 

Second, gross mismanagement. For example, he said that in the 

southeast region, about 50 to 75 examiners were kept at their 

homes, essentially without work, to perform 8 months between approximately September 2011 to May 2012. 

He also testified that there were results-oriented examinations in 

which the Bureau at the headquarters appeared to have decided at 

the outset to find a violation, even if none were identified. 

He said that CFPB management imposed inefficient national 

exam procedures. He said that the exams were inefficient; they 

take at least 6 weeks onsite, regardless of size and assets or footprint. 

And probably most troubling of all, he alleged that lawyers from 

the Enforcement Division joined examiners and occasionally mentioned plans to bring enforcement actions prior to completion of 

exam work and/or discovering a violation. 

He further testified that when he brought these concerns to management, he was a victim of retaliation. So, obviously, these are 

troubling allegations. 

But whether true or not, do you believe that a searching investigation into the accuracy of those claims is a legitimate, appropriate, and substantive course of inquiry for this congressional subcommittee? 

Mr. CORDRAY. Thank you, Congressman, for the question. 

I think whether true or not, the phrase you used there, it is actually a very significant matter. And I do not believe that any of 

what you just described is either accurate or justified. 

Mr. BARR. It doesn’t surprise me, that you would say that. 

Mr. CORDRAY. No. Let me say our supervision program has been 

looked at very carefully 3 times now. It has been looked at by the 

Inspector General, it has been looked at by the U.S. Chamber of 

Commerce, who gave us a review of our supervision program, and 

it has been looked at by the clearinghouse of the large banks, all 

of whom determined that our supervision program is being run professionally and capably. They had various suggestions along the 

way, but none of this— 

Mr. BARR. But do you think it would be appropriate for us to 

take a look at that as well? That would not be political theater. 

That would be a legitimate course of inquiry. Right? 

Mr. CORDRAY. I would welcome that. 

Mr. BARR. Okay. Very good. 

And so, I wanted to know just as a follow up, Mr. Director, who 

is John Dowd? 

Mr. CORDRAY. I am not sure who John Dowd is. 

Mr. BARR. The committee has a letter from John Dowd, and I believe he is a partner with the Akin Gump law firm. And it appears 

17 

that he represents Ms. Liza Strong, who is, according to Mr. 

Naraghi, the perpetrator of the retaliation against him. 

My question is: Did the Bureau hire Mr. Dowd to represent Ms. 

Strong? 

Mr. CORDRAY. I don’t know how she would be the perpetrator of 

retaliation against him. She is not his manager or supervisor. She 

has no control— 

Mr. BARR. Okay. Alleged. Alleged retaliation. But stipulating 

that— 

Mr. CORDRAY. I believe that Ms. Strong would have hired her 

own lawyer. 

Mr. BARR. Okay. So you don’t know whether or not the Bureau 

is indemnifying managers who are alleged to have retaliated 

against employees at the Bureau? 

Mr. CORDRAY. We do indemnify certain managers in accordance 

with the policy. 

Mr. BARR. So it is possible, at least, that this Akin Gump law 

firm was hired by the Bureau to represent— 

Mr. CORDRAY. Not hired by the Bureau. When there is a situation of potential conflict between an employee and the— 

Mr. BARR. Who is paying for it? Who is paying for the lawyer? 

Mr. CORDRAY. Same as with a board of directors of a company. 

Mr. BARR. So who— 

Mr. CORDRAY. The indemnification means that the Bureau would 

pay for— 

Mr. BARR. So the taxpayers are paying for lawyers to represent— 

and I would just say here, in the letter from the lawyer, that he 

is requesting that Mr. Naraghi’s statement be stricken. 

So you acknowledge that this is something that we should be 

looking at, but the lawyers that the taxpayers are paying for don’t 

want us to take seriously these allegations. 

Mr. CORDRAY. I don’t know that any of that is true at all. What 

I know is that there is such a letter. The lawyer took the position 

it should be stricken because he thinks it is a one-sided account. 

There are allegations that I believe are not true and not justified. 

Our supervision program has been looked at carefully by multiple 

external sources who had no reason to whitewash anything, and 

the supervision program has been generally professional and wellrun. 

Mr. DUFFY. The gentleman’s time has expired. 

Mr. BARR. My time has expired. 

Mr. DUFFY. The Chair now recognizes the gentleman from Washington, Mr. Heck, for 5 minutes. 

Mr. HECK. Thank you very much, Mr. Chairman. 

And Mr. Cordray, thank you so much for visiting with us this 

afternoon. 

I would like to start out, as I often have, by complimenting the 

agency and, in particular, its Office of Servicemembers Affairs 

under Holly Petraeus, for the great work they do with and for our 

active duty personnel. 

In fact, I think I noted that just last week there was the dis- covery of a $92-million circumstance to the disfavor of our active 

duty military personnel, which your agency was integral in spotlighting. And I thank you for that. 

18 

Every time you have been here, I have asked you about the status of the Military Lending Act. Rules and regulations of the Department of Defense was to promulgate it by, I think, the end of 

last calendar year. 

And I was hoping beyond hope that maybe today you could give 

us kind of an update on where those are and what it might mean 

going forward. 

Mr. CORDRAY. So, two things. 

First, I will say about the enforcement action you described, the $292 million that will be wiped off debt collection for 

servicemembers across the country, we worked with 13 State Attorneys General on that. I was pleased to see Defense Secretary Hagel 

taking a personal interest in the matter and commending that 

work. And it is good work. And it is again, as you say, Ms. 

Petraeus’ team, together with our enforcement team, who accomplished that. 

On the Military Lending Act, you are in luck. If you had asked 

me any other time, other than today, you would not have been in 

luck. But I understand that the Defense Department conveyed the 

draft Military Lending Act rules to the Office of Management and 

Budget yesterday and those will go in a fast process of review there 

and then be considered for finalization, which would bring the longstanding desire of this Congress to have military members protected against predatory lenders to real fruition. And the CFPB, as 

Congress stipulated, advised the Defense Department on those 

rules and worked with them and with the other agencies to put 

them together with great help from Treasury and the other agencies. So, I am pleased about it and it is moving forward. 

Mr. HECK. Have you had a chance to review them in the form 

as submitted to OMB? 

Mr. CORDRAY. It essentially aligns with what the drafting committee of multiple agencies put together. They are good, strong, 

comprehensive rules. Yes. 

Mr. HECK. Okay. A second question, if I may. 

As you know, we have been debating in the full committee a proposed legislation that would enable, perhaps even require the 

CFPB to offer and publish advisory opinions in response to requests from businesses. 

I was pretty concerned about the languages initially proposed, 

but very attracted to the idea as a step forward in being more collaborative and constructive, I think, between people who are regulated and the agency. 

And I am just wondering, is this something that the agency has 

considered doing? And if there were adequate resources and safeguards in place, what is your personal and professional opinion 

about whether or not it offers the potential to be a constructive 

step forward in your responsibility to interact with those that you 

regulate? 

Mr. CORDRAY. I think there may have been some issues about 

some of the legislation in terms of what is mandatory and bandwidth, and so forth. 

We have been looking at what steps we could take on our own 

to address these types of issues from industry. We do answer a lot 

of industry requests for guidance constantly, and we have given inVerDate Nov 24 2008 15:34 Dec 19, 2014 Jkt 091160 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\91160.TXT TERRI
19 

terpretive rulings and other types of things. But we are looking at 

potentially a no-action letter process, similar to that which the SEC 

has in place. Not necessarily exactly the same as that one, but that 

is the kind of process we are looking at. And I do think the agency 

will be able to do some forward-looking things on this and we 

would be happy to keep you apprised as we go. 

Mr. HECK. Conceptually, do you think this is therefore a good 

idea? Depending on the devil being in the details, of course, but do 

you think it holds the possibility of being a positive step? 

Mr. CORDRAY. I think that institutions often want guidance 

about how they should implement the law when they really aren’t 

sure about the guidance. If we can provide it, that helps get them 

through an issue, maybe save them lawyers’ fees and have clarity. 

And when we do that and we can publish it so that everyone 

knows, I think that is the best approach. 

Mr. HECK. So, finally, let me just reiterate that which I gleefully 

take the occasion to do every time you are here, sir. Thank you 

very much for the work your agency does on behalf of Armed Services personnel. It matters a lot. This is the last thing in the world 

that these young men and women ought to be worrying about. You 

have their back, and we are deeply grateful for it. 

Mr. CORDRAY. I have always been a strong advocate for that, and 

we appreciate your interest in these ongoing matters. 

Mr. HECK. Thank you. 

Mr. DUFFY. The gentleman yields back. 

The Chair would ask for unanimous consent to enter into the 

record a letter received today from the GAO to the chairman of the 

full Financial Services Committee, Chairman Jeb Hensarling, indicating that the GAO will review the organizational, cultural, and 

personnel management practices at the CFPB. 

Without objection, it is so ordered. 

The Chair now recognizes the gentleman from Pennsylvania, Mr. 

Rothfus, for 5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

And thank you, Director Cordray, for being with us this afternoon. 

Director Cordray, are you aware of any managers at the CFPB 

disqualifying a job applicant by stating that an applicant’s resume 

demonstrated that the applicant ‘‘doesn’t believe in the mission?’’ 

Mr. CORDRAY. I have no awareness of that, although I would say 

that we have had hundreds of people come to work at the Bureau 

and they seem to be uniformly interested in the mission. If they 

are not interested in the mission, I can’t imagine they would want 

to apply to the Bureau. 

Mr. ROTHFUS. Have you ever heard this expression used at the 

CFPB, that an application or somebody involved in the hiring context, somebody who is in for an interview, somebody who has applied—a manager or somebody at the CFPB says that person 

doesn’t believe in the mission? Have you ever heard that? 

Mr. CORDRAY. I never have. No. 

Mr. ROTHFUS. Will you look into this personally and report back 

to us and see if— 

Mr. CORDRAY. When you say ‘‘this,’’ who are you talking about? 

20 

Mr. ROTHFUS. We have been told that happens there. And so, I 

would ask that you look into it. 

Mr. CORDRAY. If there is any information you want to provide to 

us, whether it is anonymized or whatever— 

Mr. ROTHFUS. No. I would like you to ask your managers if this 

is part of the hiring culture there. 

Mr. CORDRAY. I will ask them that question. And if there is more 

information you want to provide so that we can look into it in more 

detail, I would be happy to do so. 

Mr. ROTHFUS. Are you aware of any managers in the CFPB’s Office of Consumer Response ever describing the hiring of a former 

congressional staffer as, ‘‘doing the party a solid?’’ 

Mr. CORDRAY. I have not heard that. We are not a partisan organization, and partisan politics has no place there. 

Mr. ROTHFUS. Okay. We have sent a letter to you requesting documents on this issue, yet your staff refuses to turn them over. 

Will you please instruct your staff to immediately produce all of 

the records we have requested to the subcommittee? 

Mr. CORDRAY. I would be happy to have our staff work with your 

staff and the subcommittee’s staff to make sure, as we were trying 

to do all along that as you engage in oversight, you have the information that you need. 

Mr. ROTHFUS. Are you aware of any of your managers interviewing a candidate for a position before a job announcement has 

formally been posted? 

Mr. CORDRAY. Say that again. 

Mr. ROTHFUS. Are you aware of any of your managers interviewing a candidate for a position before a job announcement had 

formally been posted? 

Mr. CORDRAY. I am not aware of it. I would say that, in the early 

going, when we were, you know, 10, 20, 30 people and just staffing 

up, I don’t know whether something might have occurred at one 

point or another. But, that would not be the normal process now 

that we are a fully built agency and have our processes in place. 

Mr. ROTHFUS. Again, I would ask you to go back and take a look 

at that and let us know. 

Mr. CORDRAY. Okay. 

Mr. ROTHFUS. Are you aware of a contractor ever writing a job 

description for themselves and then getting hired into that position 

without competition? 

Mr. CORDRAY. I am not aware of that. But any information you 

want to provide to us and you want us to look into something, we 

will be glad to do it. 

Mr. ROTHFUS. Again, I am going to ask you to take a look at 

that. 

Are you aware of any of your managers ever hiring an individual 

with whom they have a friendship or other personal relationship 

into a position for which the individual is objectively unqualified? 

Mr. CORDRAY. I am sure there have been many occasions at the 

Bureau where people were hired because they knew other people 

and people thought well of them and had reason to know their 

background and experience. But we do not hire unqualified people, 

and I do not believe that has been the case. But, again, if you have 

any instances that you want us to look into, we will do so. 

21 

Mr. ROTHFUS. On May 21st, Benjamin Konop, the executive vice 

president of your employee union, testified that, ‘‘Women and minority employees were being underpaid when compared to similarly 

situated White male colleagues. To date, the Bureau has denied 

each of these grievances at all stages, often using inconsistent reasoning, despite what I feel is convincing evidence of low pay for numerous women and minority workers.’’ 

Do you agree with his assessment of the situation? 

Mr. CORDRAY. It is not correct. It is not factually correct. That 

may be his perspective. Mr. Konop is representing six or eight employees in particular matters. But, in fact, we have adjusted the 

pay of dozens of employees at the Bureau, both men and women, 

no particular disparity there, both White and Minority, and it has 

happened many times. 

Mr. ROTHFUS. Are you aware of any gender pay equity issues in 

the Bureau today? 

Mr. CORDRAY. We have looked at this carefully in light of that 

testimony, and it is not indicative of what goes on at the Bureau. 

Mr. ROTHFUS. Did you take— 

Mr. CORDRAY. There were allegations made— 

Mr. ROTHFUS. —corrective action after that testimony with respect to any individuals at the CFPB? 

Mr. CORDRAY. No. There were allegations made in that hearing 

and other hearings that were completely factually incorrect, stating 

that there are pay disparities based on White and Minority and 

that no Minority pay was ever adjusted, no White pay was ever adjusted. It is factually incorrect. 

Mr. ROTHFUS. My time has expired, Mr. Chairman. 

Mr. DUFFY. The gentleman yields back. 

The Chair now recognizes the gentleman from Nevada, Mr. 

Horsford, for 5 minutes. 

Mr. HORSFORD. I would like to thank you, Mr. Chairman, the 

ranking member of the subcommittee, and the ranking member of 

the full committee. 

And thank you, Mr. Cordray, for being here today. 

Before I begin, I am one of the new members on the committee 

and one of the new members in this Congress. Before I came to 

Congress, I ran an employment and training agency for 11 years. 

Part of my job was to help train and then place thousands of 

workers in the private sector in order to help meet their workforce 

needs, and I have run into many personnel matters, diversity 

issues, in the course of that both from a labor and management 

perspective. 

I am not an employment lawyer, nor do I specialize in employment law. But I think that it is ironic that there are members of 

this subcommittee who are trying to use this Oversight and Investigations Subcommittee to really be more of a human resources and 

grievance subcommittee, and I don’t think that is our proper role. 

At no point would any employer either in the public sector or the 

private sector discuss sensitive personnel matters. It is not in the 

best interest of the employee or the employer, and it is a common 

practice. 

Furthermore, Republicans or my colleagues on the other side talk 

often about the fact that public agencies, Federal agencies, should 

22 

act more like the private sector, but, yet, they would have you come 

here today and ask you questions that they would never ask of the 

private sector in the manner that they are asking you. 

And so, I would just first like to give you an opportunity to put 

on the record, as you did in the beginning of your opening statement, what you are doing, as the employer, to address from a systemic standpoint the workforce issues that have been raised individually or collectively at the CFPB. 

Mr. CORDRAY. Sure. And, frankly, we probably could have used 

your expertise early on in building this new agency. But it is difficult to try to address allegations about individual employee situations in a public setting, and I have to be, as I said, careful about 

privacy and due process rights of those involved. 

To your question, what we have done here is—first of all, the 

main focus of these issues for us started with and has been the performance review system, which we determined did not treat employees fairly and had an adverse effect on a number of them. And, 

as a result, the system has been overhauled, scrapped, if you will, 

a new system put in place, and we have taken the significant step 

for the agency of remediating individual employees to make sure 

there is no lingering adverse effect from that. 

Second, we have made management structural changes at the 

Bureau to focus on and address the issues of ongoing culture at the 

agency. We continue to make specific efforts around diversity in 

hiring and contracting, and those are ongoing, including recruiting 

at a broad range of institutions, including Historically Black Colleges and other Latino and Minority-serving institutions. 

And it is an ongoing focus for us to be the diverse agency that 

we should be if we are representing and supporting the diverse set 

of American consumers across this country, which is a growing element of the American public. It is the present and the future of 

this country, and we need to make sure that we are handling 

things appropriately in this regard as well. 

Mr. HORSFORD. Thank you. 

And in my remaining time left, I just want to ask, going to your 

central mission—my constituents don’t care about this process 

stuff. If there are legitimate issues, they need to be addressed. You, 

as the employer, need to be held accountable to address those. And 

our oversight functions should be to do that. 

What I want to know is around the mission you provide to my 

constituents around consumer protection, consumer complaints, 

mortgage help and housing counseling. That is what my constituents want to know about. 

So can you briefly tell me how I can get that information out so 

that my constituents can be better served. 

Mr. CORDRAY. Sure. And I would say most of all—and this is, 

again, a consumer response that we have spent so much time talking about. They have been able and powerful and effective at responding to individual complaints of consumers across this country. 

If you feel you have been mistreated on your mortgage or your 

credit card account or bank accounts, auto loans, student loans, at 

consumerfinance.gov, you can file a complaint with us and we will 

work on it. 

Mr. DUFFY. The gentleman’s time has expired. 

23 

Mr. CORDRAY. You can call us, toll-free, at 1–855–411–CFPB 

also, to get those complaints— 

Mr. DUFFY. You want a Web site, too, Mr. Cordray? 

Mr. CORDRAY. Consumerfinance.gov. 

Mr. DUFFY. The gentleman’s time has expired. 

The Chair now recognizes the gentlelady from Missouri, Mrs. 

Wagner, for 5 minutes. 

Mrs. WAGNER. Thank you, Mr. Chairman. 

And thank you, Director Cordray. 

Director Cordray, in the committee’s June 14, 2014, hearing, you 

said that Stuart Ishimaru, the Director of the CFPB Office of Minority and Women Inclusion, commissioned a Deloitte consulting 

report in September 2013 to get a baseline so that he could develop 

a strategic plan for the office. Is that correct, sir? 

Mr. CORDRAY. That is correct. 

Mrs. WAGNER. And Mr. Ishimaru was hired, I believe, in April— 

April 30, 2012. Is that correct? 

Mr. CORDRAY. Yes. And he started to try to commission that report and started out with trying to do a small business procurement and that led to a process where nobody qualified. 

Mrs. WAGNER. Let me just say this— 

Mr. CORDRAY. So it took a while. 

Mrs. WAGNER. I don’t understand. I do the math here and Mr. 

Ishimaru waited over a year— 

Mr. CORDRAY. No. 

Mrs. WAGNER. —to commission his baseline report. 

Mr. CORDRAY. Not correct. 

Mrs. WAGNER. He did for, ‘‘a strategic plan,’’ sir. 

Mr. CORDRAY. Not correct. He started a procurement. We tried 

to do a small business procurement, which is something that the 

government seems to want us to do, and we are willing to do it. 

Mrs. WAGNER. It seems like a very long time to wait to get a 

baseline. 

Mr. CORDRAY. It was—I would agree with that. It was a long 

time, but it wasn’t his problem. 

Mrs. WAGNER. Will you share with the committee a copy of the 

contract between the CFPB and Deloitte? 

Mr. CORDRAY. I beg your pardon? 

Mrs. WAGNER. Would you share a copy of the contract between 

the CFPB and Deloitte with the Financial Services Committee? 

Mr. CORDRAY. Have we been asked to do that? 

Mrs. WAGNER. I am asking you to. 

Mr. CORDRAY. Okay. We would be happy to work with your 

staff— 

Mrs. WAGNER. Thank you. I appreciate that. 

Mr. CORDRAY. —and the committee staff to get you the information you need. 

Mrs. WAGNER. I would like to have a copy of the contract, please. 

Director Cordray, not long after the Deloitte report came out in 

September 2013, revealing racial and gender disparities, the Bureau entered into negotiations with the union in January 2014 regarding similar issues. In your last appearance before the committee, you made it sound like you acted quickly once you discovered there was a problem. 

24 

However, as we have heard in prior testimony from Mr. Ben 

Konop, the CFPB employee who heads the union and was representing the employees during these negotiations, he testified that 

he was never made aware of the Deloitte report and that, in fact, 

it was the complete opposite. He said, ‘‘Management refused to acknowledge the documented unfairness and denied each of the grievances at all stages, often using inconsistent reasoning.’’ 

Is this consistent with good-faith negotiations, sir, do you believe? 

Mr. CORDRAY. I think there are two things incorrect in what you 

just laid out and I think incorrect in Mr. Konop’s testimony. 

The first is you said we didn’t act quickly. We acted very quickly. 

This report was received by the Bureau in the OMWI office on September 30th. It was brought to the executive committee in early 

November. And by January, we were in bargaining with the union 

to fix the problem. That is very fast action, particularly on the part 

of the Federal Government, as you would acknowledge. 

Mrs. WAGNER. Why did the union not have any access to or information from this report? This was months, Director Cordray. 

Mr. CORDRAY. I don’t know about the access to the report, but 

we put this into bargaining with the union— 

Mrs. WAGNER. It was a part of their negotiations that they were 

in the middle of and you did not even talk about— 

Mr. CORDRAY. No. This report has been misunderstood and misused. Okay? 

It was an OMWI limited report to get a baseline for the OMWI. 

If you look at the key findings of the report, this isn’t even part 

of the key findings. That wasn’t what it was about. 

Mrs. WAGNER. You don’t think that this would have been important information during the union negotiations, Director Cordray? 

Mr. CORDRAY. What was important information was that we provided information about unevenness in the performance reviews 

system. We bargained over it. I was fully committed to just scrapping it. 

Mrs. WAGNER. Were your employees aware of this— 

Mr. CORDRAY. And we did scrap it. 

Mrs. WAGNER. Were the employees who were in the negotiations 

with the union aware of the Deloitte study? 

Mr. CORDRAY. I don’t know who was aware of the Deloitte report, 

and when. 

Mrs. WAGNER. Were you aware of the Deloitte study? 

Mr. CORDRAY. As I said, the report was brought to our executive 

committee and I reviewed it during—for a meeting in mid-November of 2013. 

Mrs. WAGNER. So you were aware of the Deloitte report— 

Mr. CORDRAY. And by January, less than 2 months later, we 

were in bargaining with the union to fix the system and later to 

remediate employees. You tell me when the Federal Government 

has ever moved that fast. 

Mrs. WAGNER. Well, I will tell you what. I would think that, 

when you are in the middle of negotiations with your union and 

you have had for months a report that talks about the difficulties— 

Mr. CORDRAY. It was not for months. 

25 

Mrs. WAGNER. —why you would not share that information with 

the union. 

Mr. CORDRAY. That wasn’t what the report was about. It was 

one— 

Mrs. WAGNER. You don’t believe— 

Mr. CORDRAY. It was 2 or 3 pages— 

Mrs. WAGNER. Do you believe you acted in good faith with your 

negotiations with the union? 

Mr. CORDRAY. It was 2 or 3 pages of a 110-page report. This 

should not be blown out of proportion here. 

Mrs. WAGNER. Blown out of proportion? 

Mr. CORDRAY. Yes. What was— 

Mrs. WAGNER. Have you read the report, Director Cordray? 

Mr. CORDRAY. Yes. Absolutely, I have. And what is relevant is 

we then embarked on our own analysis. There is a much broader 

report, the Snapshot report, which was about 30 to 35 pages, where 

we walk through and detail, and that convinced us that we needed 

to fix the system. 

Mrs. WAGNER. Why, sir, did you wait until the committee discovered the report in May 2014 to admit that the union’s allegations 

were true and then you retroactively compensated employees? 

Mr. CORDRAY. I don’t think any of that is correct. I don’t understand—I don’t follow you. 

Mrs. WAGNER. Did you retroactively compensate employees? 

Mr. CORDRAY. The report was submitted to us at the end of September. It came to our executive committee in early November. By 

January, we conducted our own analysis, and went into bargaining 

with the union. 

Mrs. WAGNER. And you did not bargain— 

Mr. CORDRAY. By March— 

Mrs. WAGNER. —with the union with this information— 

Mr. CORDRAY. —we decided to scrap the system. And, by May, 

we decided to remediate the employees. That is fast work. You tell 

me it is not. 

Mrs. WAGNER. I have more questions, but I will yield back the 

rest of my time. 

Mr. DUFFY. The gentlelady yields back. 

The Chair recognizes the ranking member of the subcommittee, 

Mr. Green of Texas. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. Cordray, let’s talk for just a moment about the allegations 

from another perspective. 

We have heard any number of complaints and they covered many 

different areas. But what I would like to know is: How many lawsuits have you actually had filed? 

Mr. CORDRAY. We have, as I understand it, had six matters subjected to the Equal Employment Opportunity Commission in 3 

years—I’m sorry—four individuals have filed. Two of them filed 

two complaints each. One was by a former employee, and one was 

by an applicant. That is the sum and substance of what we have 

had filed thus far. 

Mr. GREEN. And these complaints—concerns of whatever nature 

have been usually resolved without litigation. You usually acquire 

26 

some resolution for the concerns that are called to your attention 

without litigation. Is that a fair statement? 

Mr. CORDRAY. We have had a significant number of grievances. 

People have not been afraid to speak up and voice their complaints. 

Very often, we have been able to resolve those grievances in a mediated or legitimate setting without having to go to any kind of litigation. On occasion, that has not been so. But that is certainly our 

intent wherever possible. 

Mr. GREEN. And is it true that you encourage resolution such 

that people can have their concerns brought to your attention, but, 

also, resolved? 

Mr. CORDRAY. I want to have them resolved. And alternative dispute resolution, mediation, counseling, and other means have been 

fruitful ways to help people reach a productive result on both sides. 

Mr. GREEN. And is it also true that once you acquired a knowledge about the review system, you worked to correct that, that you, 

in fact, worked with the union on this question of the review system? 

Mr. CORDRAY. We did. We took the initiative on this and, with 

respect to the Congresswoman, we acted very quickly to resolve it. 

We did not push this in any litigated forum, which could have 

taken years, which has been true of other agencies, at times. We 

pushed forward. We addressed it. We thought it was the right 

thing to do. 

Mr. GREEN. And are you still working with the union to resolve 

issues as they arise? 

Mr. CORDRAY. We continue to be in bargaining with the union. 

We have matters that we are bargaining over now to resolve. We 

will have another round. That is an ongoing process, and it has 

been a very productive process. 

I think that the NTEU is professional. It deals with a number 

of different agencies. We are their newest agency. And that has 

been a way to give a voice to employees and see to it that issues 

get resolved amicably on both sides. 

Mr. GREEN. Have you demonstrated at every point your desire to 

resolve these disputes and complaints that have been raised? Have 

you always tried to work with people to resolve their complaints? 

Mr. CORDRAY. That has always been my intent. I would say not 

everything gets done as quickly as I would like. I find it to be a 

constant source of frustration. Sometimes, I am more involved. 

Sometimes, I am less involved. I like to see productive, positive results where possible, but I also like to see appropriate results based 

on the facts and circumstances. 

And I know that I have to hear both sides—the agency has to 

hear both sides and the process needs to get followed to get to appropriate results. 

Mr. GREEN. That is exactly where I wanted to go next. You have 

given me a good segue. 

It is easy to hear complaints, to hear one side of a story. But 

when you try to ascertain what the facts are, you have to hear all 

sides. That is not necessarily two, it could be three, but you have 

to hear all sides. 

27 

And that process takes a little bit longer than having a congressional hearing. It requires that you do some additional investigative from time to time. 

Do you find that trying to get to the bottom of things can require 

time that might not be thought of as time wasted, that is time well 

spent, when you try to hear from all sides? 

Mr. CORDRAY. Yes. And I have never been a judge myself. I know 

you have been. But I have been in front of many judges, and I 

know Congressman Duffy and many of the members of this panel 

have been in front of judges. And you always want them to take 

the time to understand both sides and then hope that they will 

render the fairest decision they can based on the knowledge of the 

entire matter. 

Mr. GREEN. And as you move forward, will you make sure that 

any of the concerns that are called to your attention, if they get to 

you—hopefully, they are resolved before they get to you—they are 

going to receive the kind of attention that you would want your 

own circumstance to receive if it were before a person who had to 

deliberate and come to some conclusion? 

Mr. CORDRAY. I do. And I want our employees to be treated fairly, and I want these matters to be resolved as quickly as they can 

be, but reasonably and on a full knowledge of what both sides of 

the story are or, as you say, sometimes more than two sides of the 

story would be. 

Mr. GREEN. I yield back my time. 

Mr. DUFFY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Tennessee, Mr. 

Fincher, for 5 minutes. 

Mr. FINCHER. Thank you, Mr. Chairman. 

And, Director Cordray, I appreciate you taking time today. 

We meet again today, and I am still very frustrated with some 

things that have been happening. We are talking about discrimination. From what I have read, some of your managers disregard 

their employees and won’t listen to their ideas and experience. 

Unfortunately, it seems like the central theme at the CFPB is 

not listening to those who know more than you. That is certainly 

something, as you know, we talked about manufactured housing 

over and over and over has encountered, since they spent countless 

hours with staff explaining their businesses, only to be left with 

policies that ultimately hurt consumers. 

At the end of the day, it seems as though—and this is so unfortunate—the culture of the CFPB is one where decision-makers are allowed to institute ‘‘my way or the highway’’ policies and you go to 

great lengths to protect that authority. 

So, let me get to the questions. 

I have a document here in my hand that shows, on April 17th 

and April 22nd, the CFPB issued indemnity and reimbursement 

policies for your managers, which provided that the Bureau will at 

its discretion reimburse supervisors and managers who have obtained private legal advice and/or representation regarding any actual or potential civil or criminal claim against them related to 

their informant with the Bureau. 

Question: Why did you issue these policies for your managers? 

28 

Mr. CORDRAY. It is an appropriate thing that is done in the public and private sectors. It is done with boards of directors of companies where there might be adverse interests. I personally have been 

hired by the Justice Department when I was a lawyer to handle 

some matters where the individual might be adverse to the agency. 

And I think it is an appropriate thing to do. 

Mr. FINCHER. Are non-managers, rank-and-file employees, eligible for the indemnity and reimbursement policies? 

Mr. CORDRAY. No. And that is also fairly common in companies. 

Not every employees gets reimbursed. However, they have the 

union as their representative and they can pursue grievances and 

they do. And that is appropriate as well. 

Mr. FINCHER. Do you understand that employees view this as 

your decision to protect your managers against their own employees? 

Mr. CORDRAY. No. I don’t think so. This is a policy that is consistent with public- and private-sector precedent. The Justice Department does indemnification of employees where there are individual interests distinct from that of the agency and it is not something— 

Mr. FINCHER. What kind of message, Director, do you think it 

sends to the employees? This is a pretty big deal, what has happened. What kind of message do you think it sends? None? 

Mr. CORDRAY. Having an indemnification policy? 

Mr. FINCHER. Yes. 

Mr. CORDRAY. I think it sends no more message than private 

companies that commonly have indemnification policies or insurance policies for board members and other executives. I think it is 

commonplace. 

Mr. FINCHER. But you are not a private company. 

Mr. CORDRAY. No. But it is common in larger organizations, and 

it is a policy that we looked around to look at precedent in the Federal Government as well. 

Mr. FINCHER. What other Federal agencies— 

Mr. CORDRAY. I can tell you it was also in State Government 

when I worked in State Government. 

Mr. FINCHER. The States are way more efficient than the Federal 

Government. What other Federal agencies offer blanket indemnity 

policies for managers and supervisors? 

Mr. CORDRAY. I would have to have staff get back to you in terms 

of what we looked at to arrive at that policy. 

Mr. FINCHER. Could you? 

Mr. CORDRAY. Yes, sir. 

Mr. FINCHER. Thank you. 

How many employees have been granted indemnity since these 

policies were put in place? 

Mr. CORDRAY. I don’t know exactly. But I would be happy to have 

staff follow up with you on that. 

Mr. FINCHER. How much— 

Mr. CORDRAY. It is an increasing number, as the committee digs 

into more— 

Mr. FINCHER. How much money has the CFPB spent or is planning to spend to date on reimbursing employees as a result of the 

indemnity policy? 

29 

Mr. CORDRAY. That may depend on the actions of this subcommittee. 

Mr. FINCHER. Taxpayer money. You have no idea? 

Mr. CORDRAY. If you end up pushing a number of our employees 

into a situation— 

Mr. FINCHER. We are not pushing anybody, Director. 

Mr. CORDRAY. There may be legitimate differences of opinion on 

that. 

Mr. FINCHER. This is clearly a problem that needs to be addressed, when you have these kind of allegations brought against 

the agency. 

Mr. CORDRAY. And to have me here, to have me testify, is the 

appropriate oversight, I believe. But in any event— 

Mr. FINCHER. Do you think you shouldn’t be here and have to 

testify? Do you think you are above that? 

Mr. CORDRAY. No. I have been offering to testify in front of the 

subcommittee from the beginning. I think I am the one who should 

be here. I am finally here, and I think that is appropriate. And I 

am glad to be here, and I will be here as late this evening as you 

need me. 

Mr. FINCHER. Good. We just—look, Director, we want to get to 

the bottom of it. 

Mr. CORDRAY. I know. 

Mr. FINCHER. It is not personal. 

Mr. CORDRAY. I understand. 

Mr. FINCHER. And try to fix it. 

So with that, Mr. Chairman, I yield back. 

Mr. DUFFY. The gentleman yields back. 

With the ranking member’s indulgence, we are going to do a second round. I know the Director has been kind enough to say he 

would stay until our questions are answered, and we appreciate 

that. 

With that, I recognize myself for 5 minutes. 

Mr. Cordray, it is my understanding that you received Mr. 

Naraghi’s report—it was a summary report—on September 11th of 

last year. 

And then on September 30th, as discussed, you received the 

Deloitte report, which did discuss racial disparities in pay and performance. I know it was a long report, but some portions indicated 

that. 

Mr. CORDRAY. Certain portions. Yes. 

Mr. DUFFY. On November 13th, Mr. Naraghi’s report from the 

defense group also came in. And then, on December 11th, a final 

report from the DIG group came to the CFPB. 

So there was knowledge that—or at least allegations of disparity 

in pay in regard to race and sex, and we knew that the complaints 

from Ms. Martin had come in. 

What did you do internally, and when, in regard to these allegations that you knew about at the end of last summer at the CFPB? 

Mr. CORDRAY. There were two distinct and major, I would say, 

areas of allegations. One is the performance reviews being unfair 

and the results being uneven. And that is something that we started looking at as soon as the performance review season for that fisVerDate Nov 24 2008 15:34 Dec 19, 2014 Jkt 091160 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\91160.TXT TERRI
30 

cal year closed on October 1st and it led to fairly fast action of us 

deciding to scrap the system and remediate employees. 

On the other issue of pay equity, we had determined that, in the 

early going at the Bureau, we didn’t have any kind of database for 

comparing salaries or anything more systematic of that sort. And 

we determined there were pay inequities at the Bureau. And we 

set up our own process last year to adjust pay for inappropriate 

cases for employees, and we have done that dozens of times. 

Mr. DUFFY. Hold on one second. 

Because not only did—because you claimed that, yes, one of the 

issues was the system. But you also had information coming from 

the DIG report and from Ms. Martin that there were some managerial issues as well, which you may dispute. I understand that you 

don’t agree with that. But those allegations had come in. 

So my question is: Was there an internal investigation, an internal process, at the CFPB to go, ‘‘Hey, we have some red lights out 

there. Let’s analyze the complaints that have been made by Ms. 

Martin and by these reports, and let’s find out internally what is 

happening?’’ Did you do that? Yes or no? 

Mr. CORDRAY. We did. And we are still doing it. 

Mr. DUFFY. And when did you start that? 

Mr. CORDRAY. I beg your pardon? 

Mr. DUFFY. When did you start that analysis? 

Mr. CORDRAY. The first issue was we commissioned the DIG report. It didn’t spring from someone else. We commissioned it. 

Mr. DUFFY. I am talking about internally. 

Mr. CORDRAY. It was—internally, we sought an external report 

to give us credibility. It was not a credible report. It was poorly 

done. 

Mr. DUFFY. You did not— 

Mr. CORDRAY. We now, as a result, have had to reopen that investigation. 

Mr. DUFFY. I find it odd that, if you see these issues that these 

reports lead you to believe and you get complaint from employees— 

Mr. CORDRAY. No. No. 

Mr. DUFFY. —that you wouldn’t do an internal investigation. And 

that is fine. 

Mr. CORDRAY. Nothing— 

Mr. DUFFY. I agree that you haven’t done one, because we have 

asked for correspondence from inside the agency and you haven’t 

sent us any information in regard to an internal— 

Mr. CORDRAY. It is just not an accurate chain of events. We commissioned a report. It was poorly done. It was not a credible report. 

That is the DIG report. It has forced us to go back and recommission an investigation— 

Mr. DUFFY. A new report. 

Mr. CORDRAY. —which we have ongoing right now. 

Mr. DUFFY. Let’s talk about the new report, because the seeker 

of truth, Mr. Cordray, who said, ‘‘The DIG report, the Deloitte report, all don’t work very well for me. I don’t like the results. The 

allegations that are made by Ms. Martin, I don’t like those either. 

So let me go get an unbiased report.’’ 

Mr. CORDRAY. No. No. That is not an accurate picture of events. 

31 

Mr. DUFFY. ‘‘So I am going to go to an individual by the name 

of Stanley Foster. And Mr. Stanley Foster is going to lead this investigation because I want purity and clarity in the investigation.’’ 

Mr. CORDRAY. That is just not an accurate picture of events. If 

you want me to clarify for the record, I will. 

Mr. DUFFY. I want to ask you a question. 

You are a Democrat. Mr. Pluta, where the allegations have been 

made from Ms. Martin, is a Democrat. And I think Ms. Martin is 

an Democrat, maybe an Independent. I don’t mean to call her out 

for her party affiliation. 

Mr. CORDRAY. That has no place with our agency. 

Mr. DUFFY. Yes, it does, because— 

Mr. CORDRAY. No, it does not. 

Mr. DUFFY. —Mr. Foster gave $12,250 to Democrats since 2008 

and gave $6,000 to the Obama campaign. He didn’t do any work 

for the Federal Government— 

Mr. CORDRAY. I have no idea about any of that, and that is just 

a smear to bring that into— 

Mr. DUFFY. I gave you— 

Mr. CORDRAY. —this kind of discussion. I mean, honestly. 

Mr. DUFFY. Before 2009, he had no Federal contracts, but since 

2009, he has $1.1 million in various Obama Administration agency 

contracts. 

Mr. CORDRAY. I don’t know anything about that. 

Mr. DUFFY. If you want to come to this agency, Mr. Director, and 

tell us, ‘‘We now want an independent analysis on the internal 

workings within the CFPB because we don’t like the results of the 

DIG report, we don’t like the Deloitte report, we don’t like Ms. 

Martin’s report.’’ 

Mr. CORDRAY. No. That is not accurate. 

Mr. DUFFY. ‘‘So now I am going to have’’— 

Mr. CORDRAY. None of that is accurate. I never said I didn’t like 

the Deloitte report. 

Mr. DUFFY. —‘‘a political operative with Stanley Foster’’— 

Mr. CORDRAY. We have acted on the basis of the Deloitte report. 

Mr. DUFFY. ‘‘Stanley Foster is going to come forward and do the 

unbiased report for us.’’ And he is a donor to the Democrat party 

and the Obama Administration, and you want us to believe that is 

going to be fair, Mr. Director. 

Mr. CORDRAY. Do you just want to tell a story or do you want 

me to respond and set the record straight? Which do you like? 

Mr. DUFFY. I have asked you to answer the questions. 

Mr. CORDRAY. Which do you like? We did not dispute the Deloitte 

report. We have acted on the basis of the Deloitte report. So that 

is inaccurate. The DIG report was not credible and poorly done, as 

the company itself acknowledged, and therefore had to be thrown 

out. We now have another investigation going. I wish it had been 

done sooner. But if the DIG report hadn’t been problematic, it 

would have been done at that point. That is where we stand. 

Mr. DUFFY. Why a Democrat operative? 

Mr. CORDRAY. I don’t know whether they are Democratic 

operatives or not. I honestly don’t have the slightest idea. And that 

doesn’t enter into anything done at the Bureau. 

Mr. DUFFY. Mr. Cordray— 

32 

Mr. CORDRAY. It enters into nothing done at the Bureau. 

Mr. DUFFY. —a three-person law firm as a Democrat contributor 

and you are saying you don’t know that? You are smarter than 

that. 

Mr. CORDRAY. I don’t know. It is a procurement process. It is a 

legitimate process. All of our processes are done through the government process. 

Mr. DUFFY. My time has expired. 

Mr. CORDRAY. You can disbelieve it if you want, but that is the 

nature of the— 

Mr. DUFFY. With that, my time has expired. 

The Chair now recognizes the ranking member of the full committee, Ms. Waters from California. 

You are recognized for 5 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman, and members. 

Allegations were made against the Consumer Financial Protection Bureau, and my friends on the opposite side of the aisle have 

started this investigation with subpoenas and all of that. 

And, of course, on our side of the aisle, we welcome the opportunity to investigate areas of discrimination such as have been alleged. But this has turned into a circus. 

This committee has taken it upon itself, led by the Republicans, 

to attack the Consumer Financial Protection Bureau in everything 

that they can bring up, everything they can think of, and it is getting almost comical. 

We recently, just a few minutes ago, heard from the gentleman 

on the opposite side of the aisle questioning about indemnification 

policy. 

Now, on the one hand, Mr. Cordray and the Consumer Financial 

Protection Bureau are being hammered about the allegations of 

discrimination, basically accusing the Bureau of discrimination 

above and beyond the allegations that have been made, but on the 

other hand, questions about protecting the workers with indemnification policies, because somehow they are alleging or, basically, 

concluding that is an unnecessary expenditure that should not be 

done, there is something unusual about that. 

What else can you find to ask Mr. Cordray about? 

This has turned out to be not a straightforward investigation or 

oversight responsibility in the proper way that could be done, but, 

rather, what is commonly referred to as a witch hunt. 

So, first, I would like to say to Mr. Cordray, you know that on 

this side of the aisle we are concerned about getting at the problem, and I think you understand and appreciate our responsibility 

to do that. But I want to say to you that I hope that you are not 

in any way intimidated by the attacks that are being made from 

the opposite side of the aisle. 

I think you have conducted yourself splendidly. I think that you 

have come up with responses to the allegations and you are doing 

everything that you possibly can to ensure that OMWI, that part 

of the operation that I had something to do with, as you said, based 

on Dodd-Frank—and so I do not want you, again, to be intimidated 

or threatened in any way, that the attack is one that we will join 

in with as we do our oversight responsibilities. 

33 

And I do not want you to discontinue your efforts to make sure 

that you have the kind of Bureau where every human being is respected and every human being is dealt with fairly. 

Now, having said that, would you tell the opposite side of the 

aisle one more time what you have done to correct some of the 

problems that have been encountered or that have been unveiled? 

What have you done to make sure that people are compensated, 

that they are treated fairly, and that it doesn’t happen again? 

Would you just use the next minute or so to try and do that. 

Mr. CORDRAY. Thank you, Congresswoman. I don’t mind tough 

oversight. I have been used to it in this Congress, and I appreciate 

it, actually. I do like an occasional opportunity to set the record 

straight if I am given the opportunity. 

First of all, for our performance review system, we determined 

that there were issues and concerns there about fair treatment of 

our own employees. We took the initiative. 

We have scrapped that program based on the Deloitte report, 

which we took seriously. Although it was just a piece of the 

Deloitte report, we did our own further detailed analysis to come 

to our own conclusions. And we are remediating employees around 

that system. 

We have changed the management structure of the Bureau to 

create more conscious focus on the issues of ongoing culture and 

equity and fairness. And we have made other changes, such as considerably more training for the managers, and counseling, and 

other types of things that I think are needed and appropriate. 

We also are trying to give the processes for adjudicating individual employee disputes and grievances the opportunity to work, 

make sure that those are worked through, that they are resolved 

appropriately, when other process needs to go on beyond that to 

anywhere else, that is followed appropriately and scrupulously. 

Mr. DUFFY. The gentlelady’s time has expired. 

The Chair now recognizes the gentleman from Illinois, Mr. 

Hultgren, for 5 minutes. 

Mr. HULTGREN. Thank you, Mr. Chairman. 

Director Cordray, I would like to discuss Angela Martin’s new 

settlement. According to news reports, I hear she received a lumpsum payment and a new assignment as a military affairs liaison 

outside of D.C. In exchange, she agreed to drop all of her claims 

against the Bureau. 

On June 18th, Chairman McHenry asked you why, in light of 

this settlement, the Bureau continued to employ Scott Pluta. You 

responded that you ‘‘have no basis for disciplining Scott Pluta’’ and 

that Ms. Martin’s allegations against him have not been proven. 

I find this interesting and want to understand the Bureau’s position regarding settlement agreements. 

Looking at the press release for 2 of your most recent enforcement actions, on July 10th, you announced settlement with ACE 

Cash Express. In your release, you say that ACE used false 

threats, intimidation, and harassing calls to bully payday borrowers into a cycle of debt. 

Here is another from April 9th: You announced a settlement with 

Bank of America. You say Bank of America both deceived consumers and unfairly billed consumers for services not performed. 

34 

Both cases settled before they went to court. And although both 

cases involved lump-sum payments, the consent orders both stipulate that neither company admit wrongdoing. 

My question, Mr. Director, is: How can you have it both ways? 

Is it fair to claim that companies have engaged in unproven wrongdoing when you are a plaintiff, but it is unfair to lead to conclusions when the tables are turned? 

Mr. CORDRAY. Yes. I don’t think the two are comparable at all. 

When we resolve these matters after the differences that both of 

the cases you described and no apologies for us being tough on behalf of protecting consumers, that is our job, as I see it. But at that 

point in those cases, we have engaged in a full investigation of the 

facts, often extensive depositions, document review, and really gotten at the facts. Often, it has been based on an examination that 

preceded the examination, and those facts are pretty well-established. That is the difference between the two. 

Mr. HULTGREN. Let me ask you about this. 

Mr. CORDRAY. Mere allegations, on the other hand, are something different. Okay. 

Mr. HULTGREN. Moving on, my time is going by quickly. Did you 

have a chance to watch the video from our hearing on April 2nd 

with Angela Martin? 

Mr. CORDRAY. I did. I have watched all of the subcommittee 

hearings. 

Mr. HULTGREN. Did Angela Martin lie to Congress? 

Mr. CORDRAY. I have no reason to have a point of view on that 

one way or the other. I don’t have any particular instance that— 

Mr. HULTGREN. So watching the video, you didn’t see that she 

had lied to Congress? There was nothing— 

Mr. CORDRAY. There was a lot talked about in the hearing about 

matters of which I don’t have complete knowledge or full knowledge. So it is kind of useless to ask me that. But I have no reason 

to— 

Mr. HULTGREN. You will not really answer whether she lied or 

not lied, nor will you— 

Mr. CORDRAY. I am not going to characterize any of my employees as lying. I don’t understand why that is helpful and I do not— 

Mr. HULTGREN. Let me go on to this, then. 

On April 17th, you issued a new EEO policy for employees, announcing that you had zero tolerance for workplace discrimination 

and retaliation. 

You stand by that policy, don’t you? 

Mr. CORDRAY. That is very much my policy. Yes. 

Mr. HULTGREN. Then, why has your office done nothing to hold 

Scott Pluta accountable for his actions? Why has no manager been 

disciplined by the Bureau for discriminating or retaliating against 

employees? 

Does this encourage an unhealthy and unaccountable management culture that has resulted in widespread maltreatment of employees? Do you believe you owe Angela Martin and others an apology for the way that they have been treated? 

Mr. CORDRAY. What you are talking about are allegations. Okay? 

One side of a story. All right? It may be comfortable for you to 

35 

jump to conclusions about scapegoating people, but I can’t do that, 

as the head of the Bureau. 

Mr. HULTGREN. There was a settlement here. There was something there. If there weren’t facts to it, if there wasn’t truth— 

Mr. CORDRAY. Something there was— 

Mr. HULTGREN. Sadly, you have done nothing to hold them accountable. 

Mr. CORDRAY. Something there was to reach a productive result 

for Ms. Martin, which I believe— 

Mr. HULTGREN. I think a productive result for your employees 

would be hold those who are responsible accountable. We are seeing nothing to hold Scott Pluta accountable. 

Mr. CORDRAY. If there were a basis for doing so, I would do so. 

But I am not going to scapegoat people just to satisfy you or anyone else. I am not going to do that. It is not appropriate. 

Mr. HULTGREN. I am not asking you to satisfy me, although you 

are responsible to my constituents—that is who I am representing 

up here—but, also, people who are struggling with much of what 

the Bureau is doing. 

Let me get to one last thing in the last minute that I have. 

Mr. CORDRAY. And benefiting by it as well, I would say. 

Mr. HULTGREN. In my hands, I have one last email you sent to 

Bureau employees on April 7th. In the email, you say you watched 

the April 2nd hearing in its entirety and describe the congressional 

oversight process as painful at times. Incredibly though, you use 

the same email to single out Scott Pluta for special thanks. 

Mr. Director, what kind of message do you think your email 

sends to employees when you acknowledge watching Angela Martin’s testimony and then thank the very manager who retaliated 

against her? What kind of culture do you think this engenders at 

the Bureau? 

Mr. CORDRAY. I try to treat my employees the same way we will 

treat financial institutions—commend them on things they do well, 

and criticize them on things they don’t do well, and treat them fairly based on the facts. That is my hope and intention, and that is 

the way I have always treated employees at local, State, and Federal levels of government. 

Mr. HULTGREN. It doesn’t seem like it. 

Mr. CORDRAY. You disagree. 

Mr. HULTGREN. My time has expired. I yield back. Thank you, 

Mr. Chairman. 

Mr. CORDRAY. I guess you have a different viewpoint based on 

a few hours of hearing allegations. That is all you have to go on. 

Mr. DUFFY. The gentleman’s time has expired. 

Mr. Green has advised me that he wants to reserve his time, so 

I am not being unfair. 

The Chair recognizes the gentleman from Kentucky, Mr. Barr, 

for 5 minutes. 

Mr. BARR. Director Cordray, I want to follow up on the last set 

of questions that we were talking about, the indemnification policy 

within the Bureau. 

As Mr. Fincher noted, earlier this year, in April, you issued an 

indemnity and reimbursement policy for your managers. 

36 

I think your testimony earlier was that the taxpayer is paying 

for these lawyers that you are hiring to defend your managers. Is 

that right? 

Mr. CORDRAY. It is something that I have seen done in State 

Government, local government, Federal Government, and private 

sectors. 

Mr. BARR. Yes, sir. 

I heard that testimony, and that is no doubt the case. You say 

it is common in private companies to have these indemnification 

policies. What is different here is that the taxpayers are paying for 

it. 

And let me just ask you this: How many lawyers work at the 

Consumer Financial Protection Bureau? 

Mr. CORDRAY. A number work there, but that doesn’t meet the 

situation. As I told you, I have been hired by the Justice Department to represent individuals when they are— 

Mr. BARR. Right. 

Mr. CORDRAY. —when their interests are adverse to the organization. 

Mr. BARR. But do private companies typically— 

Mr. CORDRAY. And so, you can’t have any of the lawyers— 

Mr. BARR. In carrying out their indemnification policies, do private companies hire the most expensive lawyers in America? 

And, with all respect, this is a very fine law firm. Your manager 

hired the co-chairman of the department over there at Akin Gump. 

He is listed as a Super Lawyer, the best lawyers in America for 

criminal defense, white collar. He is the co-leader of the firm’s 

white-collar defense and corporate investigations practice. 

He has represented a U.S. District Judge, a former U.S. Attorney, two U.S. Senators, and a senior Member of the U.S. House. 

He represented major league baseball in investigations of Pete 

Rose. So you hired a pretty darn good lawyer from a pretty darn 

good law firm. 

And the taxpayer is paying how much on an hourly rate for this 

lawyer? 

Mr. CORDRAY. Sir, I am just trying to wrap my mind around the 

premise of your question, which as I recall was do I think that private companies hire the most expensive lawyers in the country. 

And my answer is who else do you think else hires the most expensive lawyers? 

Mr. BARR. I am just wondering— 

Mr. CORDRAY. They do. 

Mr. BARR. I am just wondering, with all of the lawyers in your 

agency, why you devote so much of scarce taxpayer resources to defending managers who are accused of retaliation? 

And, by the way, you don’t provide lawyers to the rank-and-file 

employees of the Bureau who are alleging the retaliation. Again, 

the culture of this seems very toxic. 

Mr. CORDRAY. You have completely misunderstood the point. 

Okay? 

First of all, the lawyers in the Bureau can’t represent Bureau 

employees in matters where they are potentially adverse to the Bureau. They are just all disqualified from that. That is not in the 

cards. 

37 

Second, the employees have a union that represents them in 

grievances. They have lawyers that they use to represent them. 

Mr. BARR. I bet the union doesn’t have the resources to hire the 

top lawyer and top law firm in the country. 

Mr. CORDRAY. I don’t know about individual hiring choices. I am 

not involved in that. 

Mr. BARR. At any rate, let’s talk about— 

Mr. CORDRAY. The point is, people have representation. They are 

entitled to it. 

Mr. BARR. Sure. But your agency is full of lawyers. 

But, anyway, whistleblowers—how you treat whistleblowers is an 

important issue. And the Bureau’s official congressional inquiry 

policy says, ‘‘CFPB staff shall confer with CFPB’s Office of Legislative Affairs in advance of providing any internal documents or any 

information to a Member of Congress or congressional staff.’ I assume that would be this investigatory subcommittee. 

Also, ‘‘The policy has no exception for whistleblowers.’’ Again, 

what kind of message does that send to your employees that if they 

are going to be a whistleblower, before they come to us investigating these matters, they have to check in with management. 

Mr. CORDRAY. I don’t think that is the case. I think you have had 

plenty of people come to you and they haven’t had to check with 

our legislative office in advance. 

Mr. BARR. Well, that is your policy. 

Mr. CORDRAY. No. No. You are just taking that out of context. 

Mr. BARR. Am I? 

Mr. CORDRAY. I don’t know. 

Mr. BARR. It says, ‘‘CFPB staff shall confer.’’ ‘‘Shall.’’ ‘‘Mandatory.’’ 

Mr. CORDRAY. And the people who came to you, did they check 

with our legislative office first? Do you even know whether they did 

or didn’t? 

Mr. BARR. Did they violate your policy? 

Mr. CORDRAY. What is that? 

Mr. BARR. Did they violate your policy? 

Mr. CORDRAY. No. Have there been any actions for violations of 

the policy? Do you know of any? 

Mr. BARR. No. Do you know of any—let’s just— 

Mr. CORDRAY. Or is this just purely hypothetical? 

Mr. BARR. To your question, let me just read to you what one of 

the anonymous whistleblowers says to us: ‘‘I am writing an anonymous statement to inform the committee of my experiences. I am 

writing to you anonymously because, if I were to use my name, I 

fear that I would be singled out for continuing retaliation by current managers at CFPB. Other African-American employees have 

told me they would like to come forward, but they know that they 

would be targeted for retaliation if they were to do so.’’ 

So, again, I think that the fact that you are hiring expensive lawyers to defend your managers, the fact that you have a policy that 

rank-and-file members have to come and check in with you— 

Mr. CORDRAY. No. No. You are just not understanding my point. 

Maybe it is on purpose. I don’t know. But the lawyers at the agency cannot represent the agency in matters where there is potential 

conflict with the agency. I am sure that— 

38 

Mr. DUFFY. The gentleman’s time has expired. 

Mr. BARR. The fact that you are hiring the most expensive law 

firm— 

Mr. DUFFY. The gentleman’s time has expired. 

Mr. CORDRAY. In terms of the document you just read from, I am 

not sure what it is. It has never been shared with me. How would 

I have any idea what— 

Mr. DUFFY. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Pennsylvania, Mr. 

Rothfus, for 5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

Director Cordray, earlier, when Congressman Duffy started his 

questions, he asked you a question about a statement that Mr. 

Scott Pluta had made, and he asked you a pretty straightforward 

question, whether or not you agreed with Scott Pluta’s characterization of the work of this committee as ‘‘political theater.’’ 

You did not say, ‘‘I agree with that.’’ You did not say, ‘‘I disagree 

with that.’’ You did not say, ‘‘Yes.’’ You did not say, ‘‘No.’’ You said, 

‘‘I hope that would not be the case.’’ 

Mr. CORDRAY. That is my view. I hope that would not be the 

case. 

Mr. ROTHFUS. Is this hearing today political theater? 

Mr. CORDRAY. I hope that would not be the case. 

Mr. ROTHFUS. That is a yes-or-no question. 

Mr. CORDRAY. It is just a matter of vague opinion that someone 

might give. I don’t know what to say about that. 

Mr. ROTHFUS. You told Congressman Hultgren that you watched 

Angela Martin’s testimony. 

Mr. CORDRAY. I have watched all the subcommittee hearings, so 

I obviously take them seriously and consider them to be oversight. 

Mr. ROTHFUS. The question for you is: Was Angela Martin’s testimony political theater? 

Mr. CORDRAY. As I said, I paid attention closely myself to the 

subcommittee hearings. This is oversight of my agency. I am the 

responsible party to the agency. 

Mr. ROTHFUS. This is frustrating. 

Mr. CORDRAY. I don’t regard— 

Mr. ROTHFUS. Are you aware of whether any of your senior managers commenting on our oversight efforts said, ‘‘Congress can’t do 

s---’’—I am not going to say the word because I don’t want my 

kids— 

Mr. CORDRAY. Sir, I don’t know where this is coming from. I have 

never heard this before. Is this an allegation? Is this somehow documented evidence? What are you referring to? 

Mr. ROTHFUS. This is what we are hearing, that—and the fact 

that you wouldn’t say that you don’t think that Angela Martin’s 

testimony was political theater—I am trying to understand the culture of what is going on at the CFPB. 

And we have somebody saying, one of your senior managers saying about our oversight efforts, ‘‘Congress can’t do s---,’’ blank, fourletter word. 

Are you aware of them—anybody ever saying that? 

Mr. CORDRAY. I am not. So you are just saying something that 

I have no idea whether it has any basis in fact or is, in fact, true. 

39 

Mr. ROTHFUS. Does the Federal Reserve Inspector General have 

independent access to your email servers? 

Mr. CORDRAY. Yes. I believe so. I don’t know that they have been 

actively engaged in overseeing it. 

Mr. ROTHFUS. We will ask you to follow up on that because, if 

they don’t have independent access, I am going to ask you to commit to providing the Fed Inspector General with independent access— 

Mr. CORDRAY. Certainly, as I have said, I take congressional 

oversight very seriously, and I am the responsible party for it. I 

would hope that it would not ever degenerate into political theater. 

It was the case today, I was told on the way over here, that some 

document that I have never seen, some 20-page document, was 

leaked by someone to the media, a half-hour before the hearing, designed to make the Bureau look bad, and not shared with us so 

that we could do anything about it. 

Mr. ROTHFUS. Ms. Martin testified— 

Mr. CORDRAY. So that doesn’t strike me as part of the process. 

Mr. ROTHFUS. Let me ask you this: Ms. Martin testified that the 

intake section within the Office of Consumer Response was known 

as the ‘‘plantation’’ because most, if not all, of the employees within 

that section were African-American. 

Prior to Ms. Martin’s testimony, did you ever hear that phrase 

used to describe any office at the Bureau? 

Mr. CORDRAY. No. I never had. And I want to say a couple of 

things because that has been misused and misinterpreted. 

There have been suggestions that management referred to the 

unit as that. That has never been the case, as far as I can tell. 

There are also allegations that people in that unit never get a 

chance for advancement, never get a chance for promotion. That is 

factually false. 

There have, in fact, been about 50 promotions of people in the 

intake section, several of them multiple times— 

Mr. ROTHFUS. Do you deny— 

Mr. CORDRAY. So the factual testimony there was erroneous. 

Mr. ROTHFUS. Do you deny that people use the term ‘‘the plantation?’’ 

Mr. CORDRAY. I don’t know one way or another about that. 

Mr. ROTHFUS. So you have taken no action to investigate the use 

of that term? 

Mr. CORDRAY. What was said was—and just listening to the testimony—that this was a unit where people were stuck there and 

had no chance to advance and that somehow— 

Mr. ROTHFUS. You never heard it referred to as the ‘‘plantation?’’ 

Mr. CORDRAY. Not until that hearing. No. 

Mr. ROTHFUS. Did you take any action after you heard that to 

ask questions about whether— 

Mr. CORDRAY. Yes, I did. I did. And what I found is, what was 

alleged in that hearing was, ‘‘Gee, nobody ever gets promoted. Nobody ever has a chance to advance. They are just kind of stuck 

there.’’ That is not true. 

Mr. ROTHFUS. Have you told people at the CFPB— 

Mr. CORDRAY. People have been promoted to management. People have been promoted outside— 

40 

Mr. ROTHFUS. —not to use language like that? 

Mr. CORDRAY. I’m sorry? 

Mr. ROTHFUS. Have you told people at the CFPB, your managers, 

never to use language like that? Anybody? 

Mr. CORDRAY. Both that and the other allegation that cannot be 

substantiated. It is hearsay about the— 

Mr. ROTHFUS. Why was Dennis Slagter removed as head of the 

Office of Human Capital? 

Mr. CORDRAY. Beg your pardon? 

Mr. ROTHFUS. Why was Dennis Slagter removed as head of the 

Office of Human Capital? 

Mr. CORDRAY. That was a personnel move within the agency to 

a different position that really had nothing to do with this. 

Mr. ROTHFUS. Was he demoted? 

Mr. CORDRAY. I don’t believe he was. It was a different move 

within the agency. It had nothing to do with this. 

Mr. DUFFY. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Texas, Mr. Green, 

the ranking member of this subcommittee, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. Cordray, do you think that we should treat the regulated the 

same way we treat the regulators, meaning do you think we ought 

to be fair to everybody? 

Mr. CORDRAY. I do think that is one of the premises that underlined these hearings as they began, which is that we should treat 

our own employees the same way we treat the industry in fair 

lending matters. And I embrace that, which is, in part, why we 

ended up changing our performance review system and remediating employees just as we would do with a company that we felt 

was potentially having issues with the fair lending laws. 

Mr. GREEN. I think that Congress should be fair to regulators 

and the regulated alike. We have had extensive hearings with reference to the CFPB. I believe you have appeared more than 50 

times, and you have addressed any number of questions from various areas of concern that, quite frankly, many were not things 

that you had knowledge about. You weren’t privy to what actually 

happened, but you have done your best to address these things. 

And because I think it is fair to address the regulated to the 

same extent that we address the regulators, I would ask: Do you 

think that we would have the top person at Goldman Sachs sitting 

here addressing questions about sexual assault at Goldman Sachs, 

as has been alleged? Just an allegation. 

Do you think we would have the top person at Goldman Sachs 

here to address how Goldman Sachs’ employees and managers 

mock the intelligence of women? 

Do you think that we would have the top person at Goldman 

Sachs seated here before the full committee addressing issues 

about pay and how women are alleging that they are receiving less 

pay for the same work that men are doing? Just an allegation. 

Do you think that we would have the top person at Goldman 

Sachs appearing before Congress to ask about social activities that 

take place at bars and clubs after hours, about escort services, 

about people who are hired to come to parties? These are allegations. 

41 

These allegations relate to an entity that comes under the purview of the jurisdiction of this committee. 

I am honored that my friends have said that they want to get 

to the bottom of discrimination and they have said in words, perhaps not as explicit as I am about to say, that this is not singling 

out the CFPB. This is not about trying to bring down the CFPB. 

They have made it clear that they want to get to the bottom of 

these allegations of discrimination. 

So since we want to be fair in Congress—and I believe we do— 

I have asked that we bring someone before this committee so that 

we can start to talk about some of these allegations at Goldman 

Sachs. It seems fair to me that Goldman Sachs would be treated 

the same way the CFPB is being treated. 

I haven’t heard Goldman Sachs complain about the way the 

CFPB is being treated. As a matter of fact, I haven’t heard any of 

the regulated complain about the way these hearings are taking 

place. I would assume that, since they are not complaining, perhaps they are acquiescing, at minimum, and they find reason to 

think that these hearings are not totally inappropriate. 

So, we have sent a letter. And I am going to ask at this hearing 

and I will be asking at future hearings, ‘‘Where are we on the Goldman Sachs case? When are we going to hear not only about the 

regulators, but also the regulated?’’ 

Invidious discrimination ought not exist anywhere. We ought to 

do all that we can to eliminate it everywhere. We have worked 

with you, and I trust that we will be working with some of these 

other regulated entities, including Goldman Sachs. 

Mr. DUFFY. The gentleman’s time has expired. 

I would join the ranking member in asking that both the CEO 

of Goldman Sachs and President Obama come to this committee 

and explain the allegations of paying women less in their organizations. 

Mr. Cordray, thank you for being here today. 

Mr. GREEN. Mr. Chairman, if I may, since you referred to my 

comments—and I appreciate your kind words—let me just accept 

your invitation to have the CEO of Goldman Sachs appear. 

Mr. DUFFY. How about the President? 

Mr. GREEN. I will be more than honored to address issues related 

to the Presidency, but our committee doesn’t have jurisdiction over 

the President. We have jurisdiction over Goldman Sachs, however. 

And since you have connoted and indicated that you are amenable to doing this, I would like for the record to reflect it, and I 

would like for you and other Members to work with you to see if 

we can’t get started and see if we can’t get Goldman Sachs here. 

Mr. DUFFY. And I will join you when we bring the President in 

as well, both of them, with the allegations of paying women unfairly. 

With that, Mr. Cordray, thank you for coming in today. 

We trust that anyone else who comes forward before this committee would not be retaliated against by the CFPB. Do I have 

your commitment on that? I am sure from your testimony today 

the answer to that would be ‘‘yes.’’ 

Mr. CORDRAY. And that has been what you have seen over the 

last few months since others have testified. 

42 

Mr. DUFFY. And the answer is ‘‘yes?’’ No one else will be retaliated against? 

Mr. CORDRAY. The answer is ‘‘yes.’’ 

Mr. GREEN. Mr. Chairman, if I may, a point of inquiry. It appears that we have gone into a third round of questioning— 

Mr. DUFFY. I will just— 

Mr. GREEN. Just equal time, Mr. Chairman. That is all I ask. 

And with that request, let me suggest that—back to the comment 

about Goldman Sachs and the President, again, we have— 

Mr. DUFFY. I gave you— 

Mr. GREEN. This would be my time. This would be my time— 

Mr. Duffy. I gave the ranking member— 

Mr. GREEN. I understand. But I was tolerant. You entered into 

a third round. So let us continue. 

Mr. DUFFY. If you want to do a third round, we can do a third 

round. But I gave you time— 

Mr. GREEN. We can do as many rounds as you would like, Mr. 

Chairman, but let me be fair to myself. I will not tolerate unfairness against myself. In fairness to me, I want to make the record 

clear. 

We have jurisdiction over Goldman Sachs. We don’t have jurisdiction—this committee has jurisdiction over all of the financial entities that are regulated. And I think that we ought to bring Goldman Sachs in. I am pleased that you agree— 

Mr. DUFFY. I would disagree, that we don’t have jurisdiction over 

the CFPB and the Administration. 

But let’s leave that alone. Maybe we can talk about that after the 

committee hearing. 

Thank you for coming in, Mr. Cordray. 

The Chair notes that some Members may have additional questions for this witness, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to this witness 

and to place his responses in the record. Also, without objection, 

Members will have 5 legislative days to submit extraneous materials to the Chair for inclusion in the record. 

With that, the hearing is adjourned. 

[Whereupon, at 6:05 p.m., the hearing was adjourned.] 

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A P P E N D I X 

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